A few years ago we recommended that IBM (tkr: IBM) roll-up certain Information Services assets to complement its Infrastructure Services business. In the meantime the Information Services space is rolling up itself with S&P Global (tkr: SPGI) working to acquire IHS Markit (tkr: INFO) as reported by the Wall Street Journal.
Tickers mentioned: CCC, DNB, EXPN, FDS, IBM, INFO, RELX, SPGI, VRSK
S&P Global is reportedly in talks to acquire IHS Markit for $44 billion. This represents approximately a 19% premium to IHS Markit’s current Market Value and approximately a 6% premium to IHS Markit’s current Enterprise Value.
IHS Markit is the product of the 2016 merger between IHS (then led by Jerre Stead, current CEO of Clarivate, tkr: CCC) and Markit, led by founder and current IHS Markit CEO Lance Uggla.
Post-close I would not be surprised if Mr. Uggla will be positioned to eventually become Chairman and CEO of the combined S&P Global/IHS Markit entity. I have some experience with the former standalone IHS where I covered the company during my I-Banking days and eventually competed against the company during my time leading Solera Holdings’ M&A organization.
I was a fan of the 2016 IHS/Markit merger as the deal brought complementary assets together. The two companies shared similar cultures built around consistent operational performance, recurring revenue businesses, strong EBITDA margins and consistent cash flow growth. Here, IHS Markit will largely be a complementary asset for S&P Global (formerly McGraw Hill Financial, renamed S&P Global in 2016).
During the COVID crisis IHS Markit’s Resources, Transportation and CMS businesses have come under pressure but the company has managed through the process well by protecting earnings and divesting non-core assets.
My guess is that S&P Global likely has a working dialogue with other Information Services companies/potential M&A targets including Verisk (tkr: VRSK), FactSet (tkr: FDS) Dun & Bradstreet (tkr: DNB), Experian (EXPN), RELX (tkr: RELX), and potentially Solera Holdings (private, which has to be saddled with a great deal of debt at this point under Vista Equity and is likely struggling given the weakness within its base of P&C Insurer clients).
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