On December 27, the business information providers, S&P Global Inc and IHS Markit Limited announced that they have come into agreement to sell their subsidiary companies in order to win regulatory approval of S&P's planned acquisition of IHS. S&P Global Inc plans to acquire IHS Markit in a deal worth $44 billion, including $4.8 billion of net debt. But, the antitrust requirements attached to the $44 billion merger require the two companies to sell their subsidiary businesses.
As a result, S&P Global plans to sell its securities data solution provider, CUSIP Global Services (CGS) to FactSet, a financial data services company, for $1.93 billion. Meanwhile, IHS intends to sell its Base Chemicals business to News Corp for $295 million.
IHS and S&P Global stated that they expect their combined company to get net sales proceeds of around $1.3 billion from selling their business divisions, which remain subject to review and approval by the antitrust regulators.
Additionally, S&P Global stated that it promised to sell its Leveraged Commentary and Data business, together with a related family of leverage loan indices as a regulatory condition set for the anticipated merger approval.
Douglas L. Peterson, the President and Chief Executive Officer of S&P Global, talked about the development: "The two divestitures we have announced today represent an important milestone in our progress toward satisfying the required regulatory conditions to complete our merger with IHS Markit. With these agreements in place, we are well-positioned to dedicate our full attention to our goals of accelerating progress, enabling innovation and serving our customers through the combination of these two world-class businesses."
Lance Uggla, the Chairman and Chief Executive Officer of IHS Markit, commented about the development: "Finding a suitable buyer for these two businesses meets a key regulatory requirement for our merger. We now look forward to combining our great companies and consolidating our businesses to drive growth for our customers around the world."
In addition, the divestiture commitments remain subject to the review and approval of antitrust regulators. S&P Global and IHS Markit expect to close their merger in the first quarter of 2022, subject to the satisfaction of regulatory conditions.
Divestiture To Help Maintain Healthy Competition
The divestment plans come a month after both S&P Global and IHS Markit won US antitrust approval for their planned merger, provided that they sell their subsidiary businesses and scrap a non-compete agreement with GasBuddy, a retail gasoline deals data provider. The $44 billion deal was first disclosed in November 2020. To win approval for their merger, the firms have agreed to sell three of IHS Market’s price reporting agency (PRA) businesses, which include PetrochemWire (PCW); Coals, Metals and Mining (CMM); and Oil Price Information Services (OPIS).
In a court filing, the Justice Department stated that IHS and S&P Global are a small number of companies that offer PRA services and compete in each of the relevant markets, leading to lower prices and increased innovation and quality for PRA customers.
One of the firms owned by IHS is OPIS, which collects and sells information related to US retail gasoline prices. Since 2009, GasBuddy has been one of the major sources of data for OPIS. In fact, OPIS has had exclusive rights to access data owned by GasBuddy for 20 years.
Because of the agreement, the Justice Department stopped GasBuddy from creating a service to compete with OPIS. Although, GasBuddy normally uses crowdsourced information to assist people in finding deals in retail gasoline.
The divestitures will preserve competition for PRA services, which are important to the proper functioning of commodity markets and also promote transparency in the financial markets, according to the Justice Department.
