Markit and IHS Sign Agreement for Combined Merger worth $13 Billion

IHS and Markit to Merge, Creating a Global Leader in Critical Information, Analytics and Solutions
Combined company creates a global information powerhouse with leading positions in energy, financial services and transportation, serving a world-leading customer base with the opportunity to deliver a broader set of next-generation solutions across industries

$1 billion share repurchase program in each of 2017 and 2018

IHS and Markit today announced the signing of a definitive agreement under which the companies will combine in an all-share merger of equals to create a global leader in critical information, analytics and solutions.

Based on the closing prices of IHS and Markit common stock on March 18, 2016, the implied equity value of the transaction is more than $13 billion.

The transaction has been unanimously approved by the Board of Directors of each company.

Upon completion of the merger, the combined company will be renamed IHS Markit and will be headquartered in London and have certain key operations based in Englewood, Colorado. IHS shareholders will own approximately 57 percent and Markit shareholders will own approximately 43 percent of the combined company on a fully diluted basis. IHS shareholders will receive 3.5566 common shares of IHS Markit for each share of IHS common stock, which based upon the IHS closing price of $110.71 on March 18, 2016, implies a per share price of Markit common shares of $31.13.

IHS Markit will be a leader in critical information, analytics and solutions, and will have non-overlapping customers and products, a strong financial profile and a world-class management team. The company will also deliver next-generation information and analytics products to help customers improve decision making. IHS Markit will have more than 50,000 key customers, including 75 percent of the Fortune Global 500, creating significant cross-selling opportunities across multiple commercial industries and governments.

The combined company’s reported results for fiscal year 2015 include approximately: $3.3 billion in revenue, $1.2 billion in adjusted earnings before interest, taxes depreciation and amortization (EBITDA), and $800 million in free cash flow.

Jerre Stead, IHS Chairman and Chief Executive Officer, said, “This transformational merger brings together two information-rich companies to create a powerful provider of unique business intelligence, data and analytics to a broad and complementary customer base. IHS Markit and its shareholders will benefit from enhanced product innovation to deliver strong returns across economic cycles. Importantly, the two companies are values-based organizations that have a strong cultural fit which focuses on customer satisfaction and colleague success.”

Lance Uggla, Chairman and Chief Executive Officer of Markit, said, “This is an exciting transaction for customers, employees and shareholders of IHS and Markit. Together, we will create a global information powerhouse and a platform for innovation that drives future revenue. At the heart of our shared vision is the opportunity to offer our customers a broader and richer content set through both existing and new products that will support their critical decision making and manage regulatory change. The combination will enhance cash flow and enable stronger returns of capital to shareholders.”

Compelling Strategic and Financial Rationale

• Creates a global information platform across industries withleading positions in energy, financial services and transportation. Thecombined company will create a platform for innovation and new productdevelopment to drive future revenue growth.
• Combination of commercial, operational and structural synergieswill result in approximately 20 percent adjusted diluted EPS growth in2017. The transaction is expected to be immediately accretive toadjusted diluted EPS, with mid-teens accretion in 2018. The newcompany expects to realize cost synergies of $125 million by year-end2019. Cost synergies are expected to be driven by integratingcorporate functions, reducing technology spend by optimizing ITinfrastructure, using centers of excellence in cost-competitivelocations, and optimizing real estate and other costs. IHS Markitanticipates an adjusted effective tax rate in the low- to mid-20percent range.
• Strong balance sheet with financial flexibility and meaningfulcapital returns. IHS Markit will have a capital policy with atarget leverage ratio of 2.0 to 3.0 times. The new company willexecute $1 billion of share repurchases in each of 2017 and 2018.
• High recurring revenue generation drives new product investments. IHSMarkit anticipates the combination will deliver approximately $100million of run rate revenue opportunities by fiscal year 2019. IHSMarkit’s subscription-based model will generate approximately 85 percent in recurring revenues, providing predictability and stability.
• Complementary and broad customer base leads to the opportunity tocross sell. IHS and Markit have deep, non-overlapping seniorrelationships across corporate, government, financial services andconsumer customers. There will be significant opportunities to offer amore diverse product set to a broader combined customer base.
• World-class management team with track record of driving valuecreation through successful M&A integration. IHS and Markiteach have a proven track record in mergers and acquisitions andintegration and have started developing plans to ensure seamlessintegration of the two companies.