US rating agency S&P Global is to buy London-based market data and research company IHS Markit in an all-stock deal worth $44bn (£33bn) that will be the biggest corporate acquisition of 2020.
The deal, which IHS Markit’s chief executive, Lance Uggla, told employees in a memo had been in the works for the last few months, will create a heavyweight in the increasingly competitive market in financial information. It highlights the growing importance of big data in financial markets governed by information-hungry trading algorithms.
It is expected to close in the second half of 2021 if it can pass reviews by antitrust regulators who have been showing increasing interest in the sector.
“The next steps will be to receive regulatory approvals both in the US and the EU, which we expect to take between six to nine months, and receive approval by our respective shareholders,” Uggla said in the internal memo.
S&P Global is best known for providing debt ratings to countries and companies, as well as data on capital and commodity markets worldwide. It became a standalone business in 2011 when its then parent McGraw-Hill separated S&P from its education business.
IHS Markit was formed in 2016 when US company IHS, whose businesses include data on automotive and technology industries, bought British rival Markit for around $6bn.
Markit, founded by former credit trader Uggla, provides a range of pricing and reference data for financial assets and derivatives.
IHS Markit has a market value of about $36.88bn based on the stock’s last close on Friday, according to a Reuters calculation, with its share price up around 22% so far this year.
As part of the deal, which includes $4.8bn of debt, each share of IHS Markit will be exchanged for a ratio of 0.2838 shares of S&P Global stock, the two companies said.
S&P Global shareholders will own roughly 67.75% of the combined company and the rest will be held by IHS Markit shareholders. Douglas Peterson, chief executive of S&P Global, will lead the combined firm, while Uggla will be a special adviser for a year after the deal closes.
Global merger and acquisition activity touched a record high in three months to the end of September, with more than $1tn worth of transactions, mostly focused on coronavirus-resilient sectors such as technology and healthcare, according to Refinitiv data.
The London Stock Exchange is in the final stage of trying to win clearance for its planned $27bn acquisition of Refinitiv, which has been through a long review process by the European Union’s competition commissioner.