The aerospace-to-energy analysis company IHS Inc. agreed to acquire Markit Ltd. in a deal that values the London-based firm at about $5.5 billion, another sign of consolidation in the financial-infrastructure industry.
IHS shareholders will get about 57 percent of the enlarged data and analytics company and Markit stockholders will receive the rest, according to a statement on Monday. The tie-up, which will be called IHS Markit, will be based in London and would have $3.3 billion in revenue based on 2015 results.
IHS is a publisher and provider of information for industries including finance, aerospace, automotive, energy and technology. Markit compiles indexes for financial products, including credit-default swaps.
Data, index and over-the-counter trading businesses are becoming sought-after assets at a time when increasing competition has made exchange-traded products such as stocks less profitable. In December,Intercontinental Exchange Inc. spent almost $6 billion buying Interactive Data Holdings Corp., a bond-pricing service, and Trayport, an energy-trading platform.
Markit shareholders will own 43 percent of the combined company. Their stake is worth about $5.5 billion based on both firms market capitalization at the end of trading last week. Thats about 4 percent more than Markits $5.2 billion value.
Bloomberg LP, the owner of Bloomberg News, competes with IHS and Markit by providing data to the financial-services industry.
Other major financial-infrastructure companies have also been acquisitive recently. Deutsche Boerse AG agreed to buy London Stock Exchange Group Plc last week, a deal that would create one of the biggest exchange operators in the world.
IHS Markit will cut costs by $125 million by the end of 2019, according to the statement. The companies will do so by integrating corporate functions and cutting technology spending, among other means.
The companies described the IHS Markit transaction as a merger of equals. Jerre Stead, IHS chairman and chief executive officer, will have the same role at the enlarged firm. Markit Chair and CEO Lance Uggla will be president and a board member. The combined board will have 11 members, with IHS providing six, including the chairman, and Markit five, including the lead director.
Uggla will become chairman and CEO when Stead retires on Dec. 31, 2017.
The deal is expected to close in the second half of the year. IHS Markit will also have some operations in Englewood, Colorado.
IHS was advised by M. Klein and Company and Goldman Sachs Group Inc., while Markit was advised by JPMorgan Chase & Co.