IHS Markit has agreed a merger with S&P Global that will bring together two of the world’s largest providers of financial market data.
Douglas Peterson, President and Chief Executive Officer of S&P Global.
The deal, which is expected to close in the second half of 2021, subject to passing antitrust scrutiny, will consist of an all-stock transaction that values IHS Markit at an enterprise value of $44 billion, including $4.8bn of net debt.
Upon completion of the transaction, current S&P Global shareholders will own approximately 67.75% of the combined company on a fully diluted basis, while IHS Markit shareholders will own approximately 32.25%.
Combined, the two companies offer a thunderous challenge to rivals such as Bloomberg, Intercontinental Exchange, and LSEG/Refinitiv by utilizing their scale and complementary assets to provide multi-asset class solutions across data, platforms, indices, and ESG analytics.
Douglas Peterson, President and Chief Executive Officer of S&P Global, commented, “Through this exciting combination, we are able to better serve our markets and customers by creating new value and insights. This merger increases scale while rounding out our combined capabilities, and accelerates and amplifies our ability to deliver customers the essential intelligence needed to make decisions with conviction. We are confident that the strengths of S&P Global and IHS Markit will enable meaningful growth and create attractive value for all stakeholders.”
Lance Uggla, Chairman and Chief Executive Officer of IHS Markit, added, “This transaction is a win for both IHS Markit and S&P Global as we leverage our respective strengths in information, data science, research, and benchmarks. Our highly complementary products will deliver a broader set of offerings across multiple verticals for the benefit of our customers, employees, and shareholders.”
S&P Global is well-known for its ratings business, S&P Global Ratings, which is the largest of ‘Big Three’ credit rating agencies, assigning roughly half of all ratings issued on US credit securities. The business has boomed in recent years amid a record low-interest-rate environment and soaring debt issuance.
S&P Global’s indexing division, S&P Dow Jones Indices, has perhaps, however, been the group’s most resounding success, gaining from the immense shift into passive-linked products, such as ETFs, in recent years. ETFs tracking S&P indices currently house over $1.7 trillion in assets under management.
S&P DJI includes commodity benchmarks, but the firm is particularly well-known for its comprehensive equity offering that covers the global investable universe and includes economic development, geographic region, country, market capitalization, and sector sub-index variations.
Among its roster are the two most widely followed benchmarks for the health of the US stock market – the S&P 500 and the Dow Jones Industrial Average.
The tie-up with IHS Markit, perhaps best-known in investment circles for its iBoxx and iTraxx bond and credit index families, would add powerful capabilities in fixed income indexing, a segment that is tipped to enjoy the strongest ETF AUM growth among major asset classes in the future.
The iBoxx series tracks bond markets globally using transparent, rules-based methodologies while maintaining minimum levels of liquidity. The series includes a wide range of sub-index granularity by sector, rating, maturity, and size.
The iTraxx series tracks the credit default swap markets in Europe, Australia, Japan, and Asia Pacific ex-Japan. The indices allow investors to express their bullish or bearish sentiments on credit as an asset class, while the selection methodology ensures that the indices are replicable and represent the most liquid, traded part of the market.
IHS Markit is also a significant vendor of pricing data and services for credit markets, further helping to strengthen S&P Global’s position in this segment.