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IHS Markit Ltd INFO

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Morningstar’s Analysis

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As Its Merger With S&P Approaches, Our Outlook for IHS Markit Remains in Place

Zain Akbari, CFA Equity Analyst

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.

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Company Profile

Business Description

IHS Markit is a leading provider of data and analytics to corporate and sovereign clients across a wide variety of industries. Financial markets accounted for 42% of fiscal 2020 revenue, transportation 27%, resources (energy and chemicals) 20%, and CMS (consolidated markets) 11%. Approximately 60% of fiscal 2020 revenue came from the United States. IHS Markit has approximately 16,000 employees worldwide. About 74% of fiscal 2020 revenue was recurring and fixed, 14% recurring and variable, and 12% non-recurring. S&P Global has offered to acquire IHS Markit, with holders of the target firm set to receive 0.2838 shares of the combined entity (a little less than one third of the total), in a deal valued at $44 billion upon announcement.

25 Ropemaker Street, 4th Floor, Ropemaker Place
London, EC2Y 9LY, United Kingdom
T +44 2072602000
Sector Industrials
Industry Consulting Services
Most Recent Earnings Aug 31, 2021
Fiscal Year End Nov 30, 2021
Stock Type
Employees 16,000