S&P Global has agreed to buy IHS Markit in a deal that values the data provider at $44bn including debt, as the race for scale in the business of supplying data to global financial markets intensifies.

Under the terms of the all-share agreement announced on Monday, S&P Global will pay 0.28 of its own shares for each IHS Markit share. The deal will leave S&P Global shareholders with almost 68 per cent of the combined company.

The acquisition is the latest stage in the consolidation among large data providers, which accelerated last year when the London Stock Exchange agreed to acquire Refinitiv for $27bn. In August, Intercontinental Exchanges, the owner of the New York Stock Exchange, purchased US mortgage data provider Ellie Mae for $11bn.

“Through this exciting combination, we are able to better serve our markets and customers by creating new value and insights,” said Douglas Peterson, chief executive of S&P Global.

The companies expect to generate $480m of annual cost savings from the deal, as well as $350m of cross-selling opportunities.

London-based IHS Markit had been considered a potential takeover target since the LSE captured Refinitiv. 

The swoop by S&P Global, which has a market value of about $82bn, on IHS Markit is the largest deal this year. Formed through the 2016 merger of IHS and Markit, IHS Markit will boost S&P Global’s data and analytics offerings.

Dealmakers have become more comfortable with large-ticket transactions in recent months, emboldened by positive news of a Covid-19 vaccine and the end of the US election.

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S&P Global, the company that controls Standard & Poor’s rating agency, has been exploring options to bolster its data business since it bought SNL Financial for $2.2bn in 2015, said a person with knowledge of the matter.

The data analytics industry has been heating up as companies team up to compete against behemoths such as Michael Bloomberg’s eponymous company, whose terminals are ubiquitous across Wall Street. 

However, the deal is likely to face serious regulatory scrutiny as antitrust watchdogs are increasingly concerned about the oversized market power of an ever shrinking group of data providers. LSE’s deal with Refinitiv has faced intense scrutiny in Brussels, signalling that regulators will subject large transactions to lengthy probes.

Via Financial Times