Analyst Note| Zain Akbari, CFA |
Although its planned merger with wide-moat S&P Global could slide slightly from its originally expected fourth-quarter close (IHS Markit’s management suggests a brief delay would not be surprising), we continue to expect the deal to be consummated substantially as announced. We plan to adjust our valuation of wide-moat IHS Markit to account for S&P shares’ current trading value. At the acquirer’s current share price, our valuation of IHS Markit would rise to around $120 per share from $117 (IHS Markit holders are to receive 0.2838 shares of S&P for every IHS Markit share). We still suggest investors planning to hold shares in the combined company long term look to our $378 per share valuation of S&P Global, which implies IHS Markit’s shares are worth about $107 each, somewhat below their current trading value. Still, we believe IHS Markit’s recurring revenue model will further diversify S&P’s revenue, limiting both the upside and downside scenarios for the combined firm.