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Does IHS Markit deal make sense?

Monday, March 21, 2016 - 01:24

U.S.-based IHS has agreed to buy Markit to create a $13 billion London-based data and business research giant, in the latest example of a U.S. company moving its domicile overseas where corporate tax rates are lower. Ivor Bennett reports

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The milestones have come thick and fast for Markit. But the IPO celebrations of 2014 will be nothing compared to this. A takeover by IHS has valued the market-data firm at nearly 6 billion dollars Not bad for a company that began life just 13 years ago in a barn outside London. SOUNDBITE (English) SWAHA PATTANAIK, MARKETS COLUMNIST, REUTERS BREAKINGVIEWS, SAYING: "I think it was probably not expected, definitely and we got a very good jump in the Markit share price in pre-market trade so I think it was probably a surprise for both companies." Markit's shares were up 8.5 percent in early trading - IHS's 5.6 - as investors cheered the prospect of a 13-billion dollar data giant. But will big be beautiful? IHS Markit as it'll be known has forecast a wealth of cross-selling revenues - but if the products didn't sell separately before, why will they now? SOUNDBITE (English) SWAHA PATTANAIK, MARKETS COLUMNIST, REUTERS BREAKINGVIEWS, SAYING: "The argument for both companies is that each individually have premier data or analytics service and that they can do better together. That's not absolutely obvious because it's not clear that each of their customer base necessarily wants to buy what the other company offers." What is clear, though, are the positives of relocating to London, where corporate tax rates are much lower. So-called tax inversion deals have become the subject of a fierce debate in the US And a source of concern for the government. But the company says it's confident it won't fall foul of regulations.

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Does IHS Markit deal make sense?

Monday, March 21, 2016 - 01:24