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December 28, 2021

S&P, IHS Markit to divest certain units before merger

By Verdict Staff

Financial information providers S&P Global and IHS Markit have agreed to offload certain operations in a bid to gain regulatory nod for their merger.

The firms recently announced the $44bn merger deal, challenging rivals Bloomberg and Refinitiv.

As part of its move to get clearance for this transaction, S&P Global has now agreed to divest its CUSIP Global Services (CGS) business to FactSet for $1.925bn.

CGS is said to operate a database of 60 separate data elements which identifies over 50 million financial instruments worldwide. These data sets are said to be utilised for security master files leveraged for front, middle and back-office functions.

In addition, the firm offers CUSIP and CINS identifiers globally and is the official numbering agency for ISIN identifiers in the US.

The deal is expected to significantly scale up FactSet’s position in the global capital markets and further accelerate its open data strategy.

The firm plans to integrate CGS to its FactSet Content and Technology Solutions (CTS). This move is anticipated to increase CTS’s annual subscription value (ASV) to over $425m on a pro forma basis.

CGS’s team will report to FactSet executive vice president and head of CTS Jonathan Reeve.

As part of FactSet, CGS will continue to steward the CUSIP system in collaboration with the American Bankers Association (ABA) in a bid to facilitate smooth transition and ensure continued development.

This also means that CGS will continue to cater to the global securities market.

FactSet expects the deal to immediately add to its adjusted operating margins.

Besides, the firm anticipates the deal to be accretive to its “adjusted diluted EPS in the first year of ownership, excluding purchase price amortisation and one-time integration costs”.

FactSet also anticipates an estimated tax benefit of around $200m through the deal.

FactSet CEO Phil Snow said: “CGS is a unique asset with tremendous market recognition providing deep alliances across the financial industry.

“Its core competency in securities identification aligns well with FactSet’s industry leading data management capabilities. We believe this acquisition will greatly benefit FactSet’s clients, employees and shareholders.”

S&P Global president and CEO Douglas Peterson said: “CGS has delivered outstanding service, reliability, and innovation to the global securities market for more than 50 years, and I am highly confident that FactSet will continue to build on this heritage.”

In order to get regulatory nod, S&P Global will also divest its Leveraged Commentary and Data business, as well as a related family of leveraged loan indices.

Meanwhile, IHS Markit struck a $295m deal to offload its Base Chemicals business, which offers research and analysis on chemicals markets.

The Chemicals business will be sold to News Corp, which is also set to buy IHS Markit’s Oil Price Information Services, Coal, Metals and Mining, and PetroChem Wire operations.

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