S&P to buy IHS Markit in $44 bn mega deal to form Wall Street data giant

Data giant S&P Global Inc has agreed to buy IHS Markit Ltd in a deal worth $44 billion that will be 2020’s biggest merger, creating a heavyweight in the increasingly competitive market in financial information.

The mega deal, which includes $4.8 billion of debt, is a sign that deal-making activity is accelerating as breakthroughs in developing COVID-19 vaccines improve the economic outlook.

Deals touched a record high in the September quarter, with more than $1 trillion worth of transactions, mostly focused on coronavirus-resilient sectors such as technology and healthcare, according to Refinitiv data.

Under the terms of the deal, each share of IHS Markit will be exchanged for a fixed ratio of 0.2838 shares of S&P Global stock, the two companies said in a statement.

Once the deal is completed, S&P Global shareholders will own roughly 67.75% of the combined company on a fully diluted basis, while IHS shareholders will own about 32.25%.

S&P Global is renowned for providing debt ratings to countries and companies, as well as data on capital and commodity markets worldwide. It became a standalone business in 2011 when its then parent McGraw-Hill separated S&P from its education business.

IHS Markit was formed in 2016 when IHS, whose businesses range from data on automotive and technology industries to publishing Jane’s Defence Weekly, bought Markit Ltd for around $6 billion.

Markit, founded by former credit trader Lance Uggla, provides a range of pricing and reference data for financial assets and derivatives.

IHS has a market value of around $36.88 billion based on the stock’s last close on Friday, a Reuters calculation showed, with its share price up around 22% so far this year.

The transaction is likely to face close scrutiny from competition watchdogs as the market for financial information becomes increasingly concentrated.

The Wall Street Journal reported news of the deal earlier on Monday. 

The London Stock Exchange is in the final stage of trying to win clearance for its planned $27 billion acquisition of data provider Refinitiv, which has been through a long review process by the European Union’s competition commissioner.

Refinitiv was carved out of Thomson Reuters by private equity giant Blackstone in 2018, when it bought a 55% stake in the business in its biggest bet since the 2008 financial crisis. Thomson Reuters, parent of Reuters News, retains a 45% holding in the business.