UK based analytics and market data firm Markit has agreed to a merge with US rival IHS in an all share deal to create a $13bn heavyweight.
The new company will be called IHS Markit and will be headquartered in London. IHS shareholders will own 57 per cent of the company while Markit’s will hold 43 per cent.
“We will create a global information powerhouse and a platform for innovation that drives future revenue,” said Lance Uggla, chairman and chief executive of Markit.
Jerry Stead, the chief executive of IHS, will become CEO of the combined firm until his retirement at the end of 2017. Uggla will then take over, from his role as president.
The company expects to make savings of $125m by the end of 2019. Savings are expected to be driven by integrating corporate functions, optimising IT infrastructure and using optimising real estate and other costs.
IHS Markit anticipates an adjusted effective tax rate in the low- to mid-20 percent range, compared to 35 per cent in the US. The new company is also planning a $1bn share buy back in each of 2017 and 2018.
“The $13bn merger will create a financial and corporate information powerhouse, that could directly challenge traditional rivals in the space like Bloomberg and Thompson Reuters,” said Peter Gray, partner at Cavendish Corporate Finance.
The IHS Markit deal is the latest in raft of big deals that has put 2016 on target to beat the record number of mergers and acquisitions in 2015.
“The UK continues to be one of the most active arenas for inward bound M&A activity and based on leading investment banks work in progress, the likelihood is that further mega deals will be announced during the course of 2016,” Gray added.