Markit Ltd (NASDAQ:MRKT) and IHS Inc. (NYSE:IHS) today unveiled their agreement to merge, creating a giant in critical information, analytics and solutions.
Based on the closing prices of IHS and Markit common stock on March 18, 2016, the implied equity value of the transaction exceeds $13 billion. The transaction has gained the unanimous approval of the Board of Directors of each company.
Once the merger is complete, the combined company will be renamed IHS Markit and will be headquartered in London, with certain key operations to be based in Englewood, Colorado. IHS shareholders will own approximately 57% and Markit shareholders will own approximately 43% of the combined entity on a fully diluted basis.
IHS shareholders will receive 3.5566 common shares of IHS Markit for each share of IHS common stock, which based upon the IHS closing price of $110.71 on March 18, 2016, implies a per share price of Markit common shares of $31.13.
IHS Markit is set to have more than 50,000 key customers. The combined entity’s reported results for fiscal year 2015 include approximately: $3.3 billion in revenue, $1.2 billion in adjusted earnings before interest, taxes depreciation and amortization (EBITDA), and $800 million in free cash flow.
Jerre Stead, IHS Chairman and Chief Executive Officer, said,
“This transformational merger brings together two information-rich companies to create a powerful provider of unique business intelligence, data and analytics to a broad and complementary customer base. IHS Markit and its shareholders will benefit from enhanced product innovation to deliver strong returns across economic cycles. Importantly, the two companies are values-based organizations that have a strong cultural fit which focuses on customer satisfaction and colleague success.”
Lance Uggla, Chairman and Chief Executive Officer of Markit, said,
“This is an exciting transaction for customers, employees and shareholders of IHS and Markit. Together, we will create a global information powerhouse and a platform for innovation that drives future revenue. At the heart of our shared vision is the opportunity to offer our customers a broader and richer content set through both existing and new products that will support their critical decision making and manage regulatory change. The combination will enhance cash flow and enable stronger returns of capital to shareholders.”
The new company will execute $1 billion of share repurchases in each of 2017 and 2018.
The combination is forecast to deliver approximately $100 million of run rate revenue opportunities by fiscal year 2019.
The Board of Directors of the combined company will be comprised of 11 members, with IHS designating six members (including the chairman) and Markit designating five members (including the lead director) from their current boards.
The transaction is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals and approval by both IHS and Markit shareholders.
For the full press release on the deal, click here.