S&P Global is on the verge of closing a deal to buy IHS Markit for about $44 billion, an acquisition that would be stiff competition for other such data consolidations that have taken place in recent years.
The deal may be announced by Monday, said one person with knowledge of the matter. The Wall Street Journal first reported the news about the merger.
Largest Merger Deal of the Year
In August of this year, New York Stock Exchange owner Intercontinental Exchange (ICE) agreed to buy US mortgage data provider Ellie Mae for $11bn, the largest deal of NYSE to date. That followed London Stock Exchange’s move to acquire Refinitiv for $27bn a year ago.
The takeover of IHS Markit was imminent as there were talks of ICE being interested, and even at this late stage of talks a coup cannot be ruled out. IHS Markit might still decide to change its mind and go for a higher bid, said an analyst, who has been following the data market takeovers.
The imminent arrival of a vaccine has bolstered market sentiments and investors have become more emboldened to make large deals. The end of the US elections and all uncertainties regarding the power handover have added positive sentiments.
S&P Global has a market value of about $82 billion, and IHS Markit comes with a market capitalization of $37 billion; a merger of these two finance rating and data firms would be one of the largest this year. The takeover would be an all-stock deal, said the Wall Street Journal.
IHS Markit itself was formed after a merger of IHS with Markit in 2016. Markit was founded in the early 2000s by Lance Uggla, a Canadian who spotted an opportunity to provide analysis and data for credit default swaps just as trading of the derivatives was taking off. Uggla built up the company with some smart acquisitions and by 2014, its IPO was valued at $4.5 billion. IHS Markit employs more than 5,000 analysts, data scientists, financial experts and industry specialists.
“This transaction is a win for both IHS Markit and S&P Global as we leverage our respective strengths in in information, data science, research and benchmarks.” – said Lance Uggla, Chairman and CEO of @IHSMarkit. Read more here: https://t.co/dtslA6R3Wghttps://t.co/van6REeNdB pic.twitter.com/cCH8JObaaJ
— IHS Markit (@IHSMarkit) November 30, 2020
S&P Global that controls Standard & Poor’s rating agency, has been exploring options to bolster its data business since it bought SNL Financial for $2.2bn in 2015.
“This is a huge consolidation of financial databases and services,” said Gary Dugan, chief executive officer of the Global CIO Office, an investment firm in Singapore. “S&P probably gathered that expansion incrementally wouldn’t work and instead has gone for a major acquisition, which will deepen their product range and relevance.”
The data analytics industry is witnessing a spate of mergers and consolidations with a clear motive to eat into the market leader Bloomberg’s massive control over the data analytics, research and news space. Bloomberg terminals have a veritable hold over the Wall Street and other exchanges where all decisions are based on its data and content.
According to Bloomberg, the deal, if it goes through, would be the second-largest acquisition of 2020, after the $56 billion deal struck among China’s biggest oil and gas companies to sell their pipeline networks to a new national carrier.
Such a bid deal is sure to attract strict scrutiny from regulators worried about the oversized market power of a select few data analysis companies. LSE’s deal with Refinitiv faced intense scrutiny in Brussels and the LSE is still negotiating with European Union regulators over its deal for Refinitiv.
“Antitrust could be an issue since both are market data providers,” said Jin Rui Oh, director at United First Partners, an investment and advisory group that specializes in special situations. “That could be a little tricky.”
