Two market data giants just announced a $13 billion merger
The pair announced on Monday that they have reached "definitive agreement" for "an all-share merger of equals" to create a company with a combined market capitalization of $13 billion (£9 billion).
The merged company will be renamed IHS Markit, with IHS shareholders taking 57% of the new company and Markit investors holding the rest.
Both businesses say they have identified $125 million (£86.7 million) worth of costs they can cut post-merger and reckon they can bring in an extra $100 million (£69.4 million) of new revenue. The combined company will also undertake a huge $1 billion (£690 million) share repurchase programme in both 2017 and 2018.
Jerre Stead, chairman and CEO of IHS, says in a statement:
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, the founder, chairman, and CEO of Markit, says:
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.
Markit, founded in 2003 by former stockbroker Uggla, is best known for its PMI (purchasing managers' index) readings, which give an indication of whether economies and their constituent parts are growing or shrinking.
The company employs over 4,200 people across 13 countries and raised $1.3 billion (£900 million) floating on New York's NASDAQ in 2014.
IHS, meanwhile, has been in business since 1959 and provides industry data to governments and sectors such as technology, defence, automotive, chemicals, energy, finance, and healthcare.
Stead will run the combined business post-merger, assuming the role of CEO and chairman. Uggla will be President. But unusually, the deal also paves the way for Uggla to become CEO and chairman after Stead retires at the end of 2017. Succession plans are not usually planned out during mergers.
IHS and Markit's surprise tie-up comes hot on the heels of another huge market infrastructure deal - London Stock Exchange's merger with Deutsche Borse.