DEFM14A 1 d209990ddefm14a.htm DEFM14A DEFM14A
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

 

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  x                             Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

¨

   Preliminary Proxy Statement

¨

   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

   Definitive Proxy Statement

¨

   Definitive Additional Materials

¨

   Soliciting Material Pursuant to Rule 14a-12

IHS INC.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

x

   No fee required.

¨

   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
   (1)   

Title of each class of securities to which transaction applies:

 

     

   (2)   

Aggregate number of securities to which transaction applies:

 

     

   (3)   

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

   (4)   

Proposed maximum aggregate value of transaction:

 

     

   (5)   

Total fee paid:

 

     

¨

   Fee paid previously with preliminary materials.

¨

   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   (1)   

Amount Previously Paid:

 

     

   (2)   

Form, Schedule or Registration Statement No.:

 

     

   (3)   

Filing Party:

 

     

   (4)   

Date Filed:

 

     

 

 

 


Table of Contents
LOGO    LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

Markit Ltd., which we refer to as Markit, IHS Inc., which we refer to as IHS, and Marvel Merger Sub, Inc., a Delaware corporation and an indirect and wholly owned subsidiary of Markit, which we refer to as Merger Sub, have entered into an Agreement and Plan of Merger, dated as of March 20, 2016, as it may be amended from time to time, which we refer to as the merger agreement. Pursuant to the terms of the merger agreement, Merger Sub will merge with and into IHS, with IHS surviving such merger as an indirect and wholly owned subsidiary of Markit, which we refer to as the merger. Upon completion of the merger, Markit will be the combined group holding company and will be renamed IHS Markit Ltd., which we refer to as IHS Markit.

We believe the merger of equals will create a global information powerhouse with leading positions in energy, financial services and transportation, serving a worldwide customer base with the opportunity to deliver a broader set of next-generation solutions across industries. We believe that the merger will benefit both the Markit shareholders and the IHS stockholders and we ask for your support in voting for the applicable proposals at our respective special meetings.

If the merger is completed, holders of IHS common stock will be entitled to receive 3.5566 fully paid and nonassessable Markit common shares for each share of IHS common stock that they hold, which we refer to as the exchange ratio, in addition to cash in lieu of any fractional shares based on then prevailing market prices.

Based on IHS’s and Markit’s respective fully diluted shares as of the signing date, it is expected that the exchange ratio will result in IHS stockholders and Markit shareholders owning approximately 57% and 43% of IHS Markit, respectively, immediately following the effective time of the merger, which we refer to as the effective time. Markit common shares are currently traded on the NASDAQ Global Select Market, which we refer to as NASDAQ, under the symbol “MRKT” and IHS common stock is currently traded on the New York Stock Exchange under the symbol “IHS”. We expect that IHS Markit common shares will be listed on the NASDAQ under a ticker symbol to be mutually agreed by Markit and IHS. We urge you to obtain current market quotations of Markit and IHS common stock prior to casting your vote.

Markit will hold a special general meeting of its shareholders and IHS will hold a special meeting of its stockholders in connection with the proposed merger, which we refer to as the Markit special meeting and IHS special meeting, respectively.

At the Markit special meeting, Markit shareholders will be asked to consider and vote on (i) a proposal to approve the issuance of Markit common shares in connection with the merger, which we refer to as the Markit share issuance proposal; (ii) a proposal to approve amending and restating the bye-laws of Markit, which we refer to as the Markit amended bye-laws proposal, (iii) a proposal to approve the name change of “Markit Ltd.” to “IHS Markit Ltd.”, which we refer to as the Markit name change proposal; and (iv) a proposal to adjourn the Markit special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Markit share issuance proposal, the Markit amended bye-laws proposal or the Markit name change proposal, which we refer to as the Markit adjournment proposal. The Markit board unanimously recommends that Markit shareholders vote “FOR” each of the proposals to be considered at the Markit special meeting.

At the IHS special meeting, IHS stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the IHS merger proposal, (ii) a non-binding, advisory proposal to approve the compensation that may become payable to IHS’s named executive officers in connection with the consummation of the merger and (iii) a proposal to adjourn the IHS special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the IHS merger proposal. The IHS board unanimously recommends that IHS stockholders vote “FOR” each of the proposals to be considered at the IHS special meeting.

We cannot complete the merger unless the Markit shareholders approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal and the IHS stockholders approve the IHS merger proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Markit special meeting and/or the IHS special meeting, as applicable, please promptly mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet (if applicable) as described in the instructions included with your proxy card.

The obligations of Markit and IHS to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about Markit, IHS, and the merger is contained in this joint proxy statement/prospectus. Markit and IHS encourage you to read this entire joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 28.

We look forward to the successful combination of Markit and IHS.

Sincerely,

 

Lance Uggla

Chairman and Chief Executive Officer

Markit Ltd.

  

Jerre Stead

Chairman and Chief Executive Officer

IHS Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the Bermuda Monetary Authority for the issue and transfer of shares in Markit to and between residents and non-residents of Bermuda for exchange control purposes provided shares of Markit remain listed on an appointed stock exchange, which includes the NASDAQ. In granting such consent the Bermuda Monetary Authority does not accept any responsibility for the companies’ financial soundness or the correctness of any of the statements made or opinions expressed in this joint proxy statement/prospectus.

This joint proxy statement/prospectus is dated June 8, 2016 and is first being mailed to the shareholders of Markit and stockholders of IHS on or about June 10, 2016.


Table of Contents

LOGO

Markit Ltd.

NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS

To be held on July 11, 2016

TIME: 4:00 p.m. (London time) on July 11, 2016

PLACE: Davis Polk & Wardwell, 5 Aldermanbury Square, London EC2V 7HR, England

ITEMS OF BUSINESS:

 

  1. To consider and vote on a proposal to approve the issuance of Markit common shares (the “Markit share issuance”) in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of March 20, 2016 (as it may be amended from time to time, the “merger agreement”), by and among Markit Ltd. (“Markit”), Marvel Merger Sub, Inc., a Delaware corporation and an indirect and wholly owned subsidiary of Markit (“Merger Sub”), and IHS Inc., a Delaware corporation (“IHS”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice (the “Markit share issuance proposal”);

 

  2. To consider and vote on a proposal to approve amending and restating the bye-laws of Markit (the “Markit amended bye-laws”) to be effective upon completion of the transactions contemplated by the merger agreement, a copy of which is attached as Annex B to the joint proxy statement/prospectus accompanying this notice (the “Markit amended bye-laws proposal”);

 

  3. To consider and vote on a proposal to approve the name change of “Markit Ltd.” to “IHS Markit Ltd.” (the “Markit name change”) for registration upon completion of the transactions contemplated by the merger agreement (the “Markit name change proposal”); and

 

  4. To consider and vote on a proposal to adjourn the Markit special general meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Markit share issuance proposal, the Markit amended bye-laws proposal or the Markit name change proposal (the “Markit adjournment proposal”).

The approval by Markit shareholders of the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal is required to complete the merger described in the accompanying joint proxy statement/prospectus.

The Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal are described in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before you vote.

The joint proxy statement/prospectus accompanying this notice, including the annexes thereto, contains further information with respect to the business to be transacted at the special general meeting of the Markit shareholders, which we refer to as the Markit special general meeting. We urge you to read the joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. Markit will transact no other business at the Markit special general meeting except such business as may properly be brought before the Markit special general meeting or any adjournments or postponements thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the Markit special general meeting.


Table of Contents

BOARD OF DIRECTORS’ RECOMMENDATION:

After careful consideration, the Markit board, on March 19, 2016, unanimously approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the merger, are advisable for, fair to and in the best interests of Markit, and, subject to the requisite shareholder approvals, approved the Markit share issuance, the Markit amended bye-laws and the Markit name change.

The Markit board unanimously recommends that the Markit shareholders vote “FOR” each of the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal.

WHO MAY VOTE:

Only holders of record of Markit common shares at the close of business on June 10, 2016, the record date for voting at the Markit special general meeting, which we refer to as the “Markit record date”, are entitled to vote at the Markit special general meeting. On May 31, 2016, 207,497,790 Markit common shares were issued and outstanding, including 25,219,470 shares held by the Markit Group Holdings Limited Employee Benefit Trust (“EBT”). Each Markit common share is entitled to one vote.

Two or more persons present at the start of the Markit special general meeting and representing in person or by proxy in excess of 50% of the total issued shares in Markit entitled to vote at the Markit special general meeting (including the Markit common shares held by the EBT) shall form a quorum for the transaction of business at the Markit special general meeting. The Markit common shares represented by any proxy in the enclosed form will be voted in accordance with the instructions given on the proxy if the proxy is properly executed and is received by Markit prior to the close of voting at the Markit special general meeting or any adjournment or postponement thereof. Any proxies returned without instructions will be voted FOR the proposals set forth on this Notice of Special General Meeting of Shareholders.

All shareholders will need proof of ownership of shares in Markit, and may be asked to present a form of personal photo identification, in order to be admitted to the Markit special general meeting. In addition, if your shares are held in the name of your broker, bank, or other nominee and you wish to attend the Markit special general meeting, you must bring an account statement or letter from the broker, bank, or other nominee indicating that you were the owner of the shares on June 10, 2016.

VOTE REQUIRED FOR APPROVAL:

Your vote is very important. We cannot complete the merger without the approval of the Markit share issuance, the Markit amended bye-laws and the Markit name change. Assuming a quorum is present:

 

    approval of the Markit share issuance proposal requires the affirmative vote of a majority of the votes cast at the Markit special general meeting;

 

    approval of the Markit amended bye-laws proposal requires the affirmative vote at the Markit special general meeting of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date;

 

    approval of the Markit name change proposal requires the affirmative vote of a majority of the votes cast at the Markit special general meeting; and

 

    approval of the Markit adjournment proposal requires the affirmative vote of a majority of the voting rights held by those shareholders present at the Markit special general meeting, in person or by proxy.

Whether or not you plan to attend the Markit special general meeting, please promptly mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number included with your proxy card. If your shares are held in the name of a broker or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.


Table of Contents

By order of the Board of Directors,

Jeffrey Gooch

Chief Financial Officer and Secretary

London, England

June 8, 2016


Table of Contents

LOGO

IHS Inc.

15 Inverness Way East

Englewood, CO 80112

www.ihs.com

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be held on July 11, 2016

TIME: 9:00 a.m. Mountain Daylight Time on July 11, 2016

PLACE: IHS Corporate Headquarters, 15 Inverness Way East, Englewood, Colorado 80112

ITEMS OF BUSINESS:

 

  1. To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of March 20, 2016 (as it may be amended from time to time, the “merger agreement”), by and among Markit Ltd., a Bermuda exempted company (“Markit”), Marvel Merger Sub, Inc., a Delaware corporation and an indirect and wholly owned subsidiary of Markit (“Merger Sub”), and IHS Inc., a Delaware corporation (“IHS”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice, pursuant to which Merger Sub will merge with and into IHS with IHS continuing as the surviving corporation and an indirect and wholly owned subsidiary of Markit (the “IHS merger proposal”).

 

  2. To consider and vote on a proposal to approve, on an advisory (non-binding) basis, a specified compensatory arrangement between IHS and its named executive officers relating to the transaction contemplated by the merger agreement (the “IHS compensation proposal”); and

 

  3. To consider and vote on a proposal to adjourn the IHS special meeting (as defined below), if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the IHS merger proposal (the “IHS adjournment proposal”).

The approval by IHS stockholders of the IHS merger proposal is required to complete the merger described in the accompanying joint proxy statement/prospectus.

The IHS merger proposal, IHS compensation proposal and IHS adjournment proposal are described in the accompanying proxy statement/prospectus, which you should read carefully in its entirety before you vote.

The joint proxy statement/prospectus accompanying this notice, including the annexes thereto, contains further information with respect to the business to be transacted at the special meeting of the IHS stockholders, which we refer to as the IHS special meeting. We urge you to read the joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. IHS will transact no other business at the IHS special meeting except such business as may properly be brought before the IHS special meeting or any adjournments or postponements thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the IHS special meeting.

BOARD OF DIRECTORS’ RECOMMENDATION:

After careful consideration, the IHS board, on March 19, 2016, unanimously approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby are advisable, fair to and in the best interests of IHS and its stockholders.


Table of Contents

The IHS board unanimously recommends that the IHS stockholders vote “FOR” each of the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal.

WHO MAY VOTE:

Only holders of record of IHS Class A common stock (“IHS common stock”) at the close of business on June 10, 2016, the record date for voting at the IHS special meeting, are entitled to vote at the IHS special meeting. On the IHS record date, 67,452,437 shares of IHS common stock will be entitled to vote. Each share of IHS common stock is entitled to one vote.

VOTE REQUIRED FOR APPROVAL:

Your vote is very important. We cannot complete the merger without the approval of the IHS merger proposal. Assuming a quorum is present, approval of the IHS merger proposal requires the affirmative vote of the holders of a majority of all outstanding shares of IHS common stock entitled to vote on the IHS merger proposal. Assuming a quorum is present, approval of the IHS compensation proposal requires the affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter. Assuming a quorum is present, approval of the IHS adjournment proposal requires the affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter.

Whether or not you plan to attend the IHS special meeting, please promptly mark, sign and date the accompanying joint proxy statement/prospectus and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number included with your proxy card. If your shares are held in the name of a broker or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

By order of the Board of Directors,

Todd Hyatt

Executive Vice President & Chief Financial Officer

Englewood, CO

June 8, 2016


Table of Contents

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Markit and IHS from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Markit Ltd.
4th Floor, Ropemaker Place

25 Ropemaker Street, London EC2Y 9LY, England

+44 20 7260 2000

Attention: Investor Relations

 

IHS Inc.
15 Inverness Way East

Englewood, CO 80112
+1 303-397-2969
Attention: Investor Relations

Investors may also consult Markit’s or IHS’s websites for more information concerning the merger described in this joint proxy statement/prospectus. Markit’s website is www.markit.com. IHS’s website is www.ihs.com. Information included on either of these websites is not incorporated by reference into this joint proxy statement/prospectus.

If you would like to request any documents, please do so by July 1, 2016 in order to receive them before the respective special meetings.

For more information, see “Where You Can Find More Information” beginning on page 201.

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form F-4 (File No. 333-211252) filed with the U.S. Securities and Exchange Commission, which we refer to as the SEC, by Markit Ltd., which we refer to as Markit, constitutes a prospectus of Markit under Section 5 of the Securities Act of 1933, as amended, which we refer to as the Securities Act, with respect to the Markit common shares to be issued to IHS stockholders pursuant to the Agreement and Plan of Merger, dated March 20, 2016, as may be amended from time to time, which we refer to as the merger agreement. This joint proxy statement/prospectus also constitutes a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act only with respect to IHS stockholders. It also constitutes a notice of meeting with respect to the special general meeting of Markit shareholders, which we refer to as the Markit special meeting, and a notice of meeting with respect to the special meeting of IHS stockholders, which we refer to as the IHS special meeting and, together with the Markit special meeting, which we refer to as the special meetings.

No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated June 8, 2016. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than that date. Neither our mailing of this joint proxy statement/prospectus to Markit shareholders and/or IHS stockholders, nor the issuance by Markit of Markit common shares in connection with the merger, will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding Markit has been provided by Markit and information contained in this joint proxy statement/prospectus regarding IHS has been provided by IHS.

Unless otherwise indicated or as the context otherwise requires, each reference in this joint proxy statement/prospectus to:

 

    “2014 corporate reorganization” refers to the corporate reorganization that was completed prior to the closing of Markit’s initial public offering in June 2014 in which all of the interests in Markit Group Holdings Limited were exchanged for newly issued common shares of Markit Ltd. and, as a result, Markit Group Holdings Limited became a wholly-owned subsidiary of Markit Ltd.;


Table of Contents
    “2014 Equity Plan” refers to Markit’s 2014 Equity Incentive Award Plan;

 

    “Bermuda Act” refers to the Companies Act 1981, as amended, of Bermuda;

 

    “closing” refers to the closing of the merger;

 

    “Code” refers to the Internal Revenue Code of 1986, as amended;

 

    “combined company” refers to IHS Markit, following completion of the merger;

 

    “DGCL” refers to the General Corporation Law of the State of Delaware;

 

    “EBT” refers to the Markit Group Holdings Limited Employee Benefit Trust;

 

    “exchange ratio” refers to 3.5566 Markit common shares for each share of IHS common stock;

 

    “executive employment agreements” refers to Markit’s employment agreement with the following executive officers: Lance Uggla, Kevin Gould, Jeffrey Gooch, Shane Akeroyd and Stephen Wolff;

 

    “effective time” refers to the effective time of the merger;

 

    “Goldman Sachs” refers to Goldman, Sachs & Co.;

 

    “HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder;

 

    “IHS” refers to IHS Inc., a Delaware corporation;

 

    “IHS adjournment proposal” refers to the IHS stockholder proposal to adjourn the IHS special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the IHS merger proposal;

 

    “IHS board” refers to the board of directors of IHS;

 

    “IHS Markit” refers to IHS Markit Ltd., following completion of the merger;

 

    “IHS Markit board” refers to the board of directors of IHS Markit, following completion of the merger;

 

    “IHS merger proposal” refers to the IHS stockholder proposal to adopt the merger agreement;

 

    “IHS common stock” refers to the Class A common stock, par value $0.01 per share, of IHS;

 

    “IHS financial advisors” refers collectively to M. Klein and Company and Goldman Sachs;

 

    “IHS record date” refers to June 10, 2016;

 

    “IHS stockholders” refers to the holders of IHS common stock;

 

    “IHS required stockholder approval” refers to the approval of the IHS merger proposal at the IHS special meeting by the affirmative vote of the holders of a majority of all outstanding shares of IHS common stock as of the IHS record date;

 

    “J.P. Morgan” refers to J.P. Morgan Securities LLC;

 

    “KEIP” refers to Markit’s Key Employee Incentive Program;

 

    “M. Klein” refers to M. Klein and Company;

 

    “Markit” refers to Markit Ltd., a Bermuda exempted company, after completion of the 2014 corporate reorganization, or to Markit Group Holdings Limited, prior to completion of the 2014 corporate reorganization;

 

    “Markit adjournment proposal” refers to the Markit shareholder proposal to adjourn the Markit special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal;

 

    “Markit amended bye-laws” refers to the amended and restated bye-laws of Markit in the form attached as Annex B to this joint proxy statement/prospectus;


Table of Contents
    “Markit amended bye-laws proposal” refers to the Markit shareholder proposal to approve the Markit amended bye-laws;

 

    “Markit board” refers to the board of directors of Markit;

 

    “Markit common shares” refers to the common shares, par value $0.01 per share, of Markit;

 

    “Markit financial advisor” refers to J.P. Morgan;

 

    “Markit name change proposal” refers to the Markit shareholder proposal to approve the name change of Markit to “IHS Markit Ltd.”;

 

    “Markit record date” refers to June 10, 2016;

 

    “Markit shareholders” refers to the holders of Markit common shares;

 

    “Markit required shareholder approvals” refers to (i) the approval of the Markit share issuance proposal at the Markit special meeting by the affirmative vote of a majority of the votes cast at the Markit special meeting, (ii) the approval of the Markit amended bye-laws proposal at the Markit special meeting by the affirmative vote of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date and (iii) the approval of the Markit name change proposal at the Markit special meeting by the affirmative vote of a majority of the votes cast at the Markit special meeting.

 

    “Markit share issuance” refers to the issuance of Markit common shares as merger consideration;

 

    “Markit share issuance proposal” refers to the Markit shareholder proposal to approve the Markit share issuance;

 

    “merger” refers to the merger of Merger Sub with and into IHS, with IHS surviving the merger as an indirect and wholly owned subsidiary of Markit;

 

    “merger agreement” refers to the Agreement and Plan of Merger, dated as of March 20, 2016, as it may be amended from time to time, by and among Markit, Merger Sub and IHS, a copy of which is attached as Annex A to this joint proxy statement/prospectus;

 

    “merger consideration” refers to the right of holders of IHS common stock to receive 3.5566 Markit common shares for each share of IHS common stock held by them (together with cash in lieu of any fractional shares based on then prevailing market prices);

 

    “Merger Sub” refers to Marvel Merger Sub, Inc., a Delaware corporation and an indirect and wholly owned subsidiary of Markit;

 

    “NASDAQ” refers to the NASDAQ Global Select Market;

 

    “NYSE” refers to the New York Stock Exchange;

 

    “outside date” refers to November 30, 2016, or, if the outside date has been extended in accordance with the merger agreement, February 28, 2017;

 

    “required stockholder approvals” refers collectively to the Markit required shareholder approvals and the IHS required stockholder approval;

 

    “SEC” refers to the U.S. Securities and Exchange Commission; and

 

    “we”, “our” and “us” refer to Markit and IHS, collectively.


Table of Contents

TABLE OF CONTENTS

 

 

 

     Page  

QUESTIONS AND ANSWERS

     iii   

About the Merger

     iii   

About the Special Meetings

     vii   

SUMMARY

     1   

The Companies

     1   

The Merger and the Merger Agreement

     2   

Listing of Markit common shares; De-listing and Deregistration of IHS common stock (See page 120)

     13   

Name Change (See page 140)

     13   

Markit Amended Bye-laws (See page 138)

     13   

Markit Foreign Private Issuer Status and Fiscal Year End (See page 141)

     13   

Litigation Relating to the Transaction (See page 120)

     14   

Comparison of Stockholder Rights (See page 171)

     14   

Bermuda Company Considerations (See page 193)

     14   

The Special Meetings

     14   

Selected Historical Financial Data of Markit

     17   

Selected Historical Financial Data of IHS

     19   

Summary Unaudited Pro Forma Condensed Combined Financial Information

     20   

Reconciliation from the Net Income (Profit) to the Adjusted EBITDA under U.S. GAAP

     22   

Reconciliation from the Net Income (Profit) to the Adjusted Earnings under U.S. GAAP

     24   

Equivalent and Comparative Per Share Information

     25   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     27   

RISK FACTORS

     28   

Risks Related to the Merger

     28   

Risks Related to the Business of the Combined Company Upon Completion of the Merger

     34   

Risks Related to Markit’s Business

     41   

Risks Related to IHS’s Business

     42   

THE COMPANIES

     43   

THE MARKIT SPECIAL MEETING

     44   

THE IHS SPECIAL MEETING

     50   

THE MERGER AGREEMENT

     55   

Effects of the Merger

     55   

Background of the Merger

     55   

Markit’s Reasons for the Merger; Recommendation of the Markit Board

     64   

IHS’s Reasons for the Merger; Recommendation of the IHS Board

     68   

Certain Markit Forecasts

     71   

Summary of the Markit Management Forecasts

     75   

Certain IHS Forecasts

     76   

Summary of the IHS Management Forecasts

     78   

Certain Estimated Synergies

     80   

Opinion of Markit’s Financial Advisor

     81   

Opinion of IHS’s Financial Advisor

     87   

Interests of Markit Directors and Executive Officers in the Merger

     95   

Interests of IHS Directors and Executive Officers in the Merger

     97   

Merger Related Compensation—IHS

     100   

Certain Governance Matters Following the Merger

     101   

Certain U.S. Federal Income Tax Consequences

     103   

 

i


Table of Contents
     Page  

Certain Bermuda Tax Consequences

     113   

Certain United Kingdom Taxation Consequences

     113   

Accounting Treatment

     116   

Regulatory Approvals

     117   

Exchange of Shares in the Merger

     117   

Treatment of IHS Equity Awards

     118   

Dividend Policy and Share Repurchases

     119   

Listing of Markit common shares

     120   

De-Listing and Deregistration of IHS Common Stock

     120   

No Appraisal Rights

     120   

Litigation Relating to the Transactions

     120   

Description of the Merger Agreement

     120   

MARKIT AMENDED BYE-LAWS

     138   

MARKIT NAME CHANGE

     140   

MARKIT FOREIGN PRIVATE ISSUER STATUS AND FISCAL YEAR END

     141   

MARKIT PROPOSAL 1: MARKIT SHARE ISSUANCE

     142   

MARKIT PROPOSAL 2: MARKIT AMENDED BYE-LAWS

     143   

MARKIT PROPOSAL 3: MARKIT NAME CHANGE

     144   

MARKIT PROPOSAL 4: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE

     145   

IHS PROPOSAL 1: THE IHS MERGER PROPOSAL

     146   

IHS PROPOSAL 2: THE IHS COMPENSATION PROPOSAL

     147   

IHS PROPOSAL 3: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE

     148   

UNAUDITED PRO FORMA FINANCIAL INFORMATION

     149   

COMPARATIVE STOCK PRICES

     169   

COMPARISON OF RIGHTS OF MARKIT SHAREHOLDERS AND IHS STOCKHOLDERS

     171   

SHARE OWNERSHIP OF MARKIT DIRECTORS AND OFFICERS AND CERTAIN BENEFICIAL OWNERS OF MARKIT

     186   

SHARE OWNERSHIP OF IHS DIRECTORS AND OFFICERS AND CERTAIN BENEFICIAL OWNERS OF IHS

     190   

BERMUDA COMPANY CONSIDERATIONS

     193   

LEGAL MATTERS

     199   

EXPERTS

     199   

Markit

     199   

IHS

     199   

FUTURE STOCKHOLDER PROPOSALS

     199   

Markit

     199   

IHS

     200   

OTHER MATTERS

     200   

HOUSEHOLDING

     200   

WHERE YOU CAN FIND MORE INFORMATION

     201   

 

ii


Table of Contents

QUESTIONS AND ANSWERS

The following are some questions that you, as a shareholder of Markit and/or a stockholder of IHS, may have regarding the merger and the other matters being considered at the special meetings as well as the answers to those questions. Markit and IHS (which we refer to, collectively, as “we”) urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special meetings. Additional important information is also contained in the annexes to and the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

About the Merger

 

Q: What is the proposed transaction on which I am being asked to vote?

 

A: Markit and IHS have agreed to the strategic combination of Markit and IHS under the terms of a merger agreement that is described in this joint proxy statement/prospectus. Subject to the terms and conditions of the merger agreement, Merger Sub, a Delaware corporation and an indirect and wholly owned subsidiary of Markit, will be merged with and into IHS, with IHS surviving as an indirect and wholly owned subsidiary of Markit, which we refer to as the merger. As a result of the merger, each issued and outstanding share of IHS common stock, par value $0.01, which we refer to as IHS common stock, will be converted into the right to receive 3.5566 common shares of Markit, par value $0.01, which we refer to as Markit common shares, plus cash in lieu of any fractional shares based on then prevailing market prices. Upon completion of the merger, Markit will be the combined group holding company and will be renamed IHS Markit Ltd., which we refer to as IHS Markit or the combined company.

Following the merger, IHS common stock will be delisted from the New York Stock Exchange, which we refer to as the NYSE, and IHS common stock will be deregistered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. The shares of IHS Markit will be listed for trading on the NASDAQ upon the closing.

 

Q: Why is stockholder approval necessary and who is entitled to vote?

 

A: This joint proxy statement/prospectus serves as the proxy statement through which Markit and IHS will solicit proxies to obtain the necessary stockholder approvals for the proposed merger. It also serves as the prospectus by which Markit will issue its common shares as consideration in the merger.

Markit is holding a special general meeting of shareholders, which we refer to as the Markit special meeting, in order to obtain the shareholder approvals necessary to approve (i) the issuance of Markit common shares as merger consideration, which we refer to as the Markit share issuance and which proposal we refer to as the Markit share issuance proposal, (ii) amending and restating the bye-laws of Markit, which we refer to as the Markit amended bye-laws, effective upon completion of the merger, which proposal we refer to as the Markit amended bye-laws proposal, and (iii) the name change of “Markit Ltd.” to “IHS Markit Ltd.” for registration upon completion of the merger, which we refer to as the Markit name change and which proposal we refer to as the Markit name change proposal. We refer to the foregoing proposals as the Markit required shareholder proposals and the approval of such proposals as the Markit required shareholder approvals. Markit shareholders will also be asked to approve the adjournment of the Markit special meeting (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to approve the Markit shareholder proposals).

IHS is holding a special meeting of stockholders, which we refer to as the IHS special meeting, and which we refer to, together with the Markit special meeting, as the special meetings, in order to obtain the stockholder approval necessary to adopt the merger agreement. We refer to the stockholder approval necessary to adopt the merger agreement as the IHS merger proposal and the approval of such proposal as

 

iii


Table of Contents

the IHS required stockholder approval. IHS stockholders will also be asked to approve the adjournment of the IHS special meeting (if necessary or appropriate to obtain additional proxies if there are not sufficient votes to approve the IHS merger proposal) and to approve, by a non-binding advisory vote, the IHS compensation proposal.

We will be unable to complete the merger unless, among other things, the IHS stockholders vote to adopt the merger agreement and the Markit shareholders vote to approve the Markit share issuance, the Markit amended bye-laws and the Markit name change.

You are receiving this joint proxy statement/prospectus because you were a holder of record of Markit common shares and/or IHS common stock as of the close of business on June 10, 2016, the record date for the Markit special meeting, which we refer to as the Markit record date, and the record date for the IHS special meeting, which we refer to as the IHS record date, and are therefore entitled to vote at the Markit special meeting and/or IHS special meeting.

This joint proxy statement/prospectus contains important information about the merger, the merger agreement (a copy of which is attached as Annex A), the Markit amended bye-laws (a form of which is attached as Annex B) and the special meetings. You should read this information carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending the Markit special meeting or the IHS special meeting, as applicable. Your vote is very important and we encourage you to submit your proxy as soon as possible.

 

Q: What will IHS stockholders receive in the merger?

 

A: If the merger is completed, IHS stockholders will be entitled to receive 3.5566 (which we refer to as the exchange ratio) Markit common shares for each share of IHS common stock they hold at the effective time, which we refer to as the merger consideration. IHS stockholders will not receive any fractional Markit common shares in the merger. Instead, IHS stockholders will receive cash in lieu of any fractional Markit common shares, that they would otherwise have been entitled to receive, based on then prevailing market prices.

 

Q: What will Markit shareholders receive in the merger?

 

A: If the merger is completed, Markit shareholders will continue to hold their Markit common shares and will not receive any consideration.

 

Q: What equity stake will former Markit shareholders and former IHS stockholders hold in IHS Markit?

 

A: Under the merger agreement and pursuant to the exchange ratio, based on IHS’s and Markit’s respective fully diluted shares as of the signing date, it is expected that IHS stockholders and Markit shareholders will own approximately 57% and 43%, respectively, of the combined company common shares immediately following the effective time, excluding shares held by the EBT.

 

Q: How do I calculate the value of the merger consideration?

 

A:

The merger agreement provides that the merger consideration will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, share consolidation, share subdivision, share bonus issue or stock dividend (including any dividend or distribution of securities convertible into the IHS common stock or Markit common shares, as applicable), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of shares of IHS common stock or Markit common shares issued and outstanding after the date hereof and prior to the effective time. However, the merger agreement does not contain any provision that would adjust the exchange ratio based on fluctuations in the market value of either the Markit common shares or IHS common stock. Because of this,

 

iv


Table of Contents
  the implied value of consideration to the IHS stockholders may fluctuate between now and the completion of the merger. The value of the consideration to IHS stockholders will depend on the market value of Markit common shares at the time the merger is completed.

On March 18, 2016, the last trading day prior to the public announcement of the proposed merger, the closing price on NASDAQ was $26.80 per Markit common share. On June 3, 2016, the latest practicable date before the date of this joint proxy statement/prospectus, the closing price of the Markit common shares on the NASDAQ was $33.96 per Markit common share. We urge you to obtain current market quotations before voting your shares.

 

Q: What do I need to do now to receive the merger consideration?

 

A: After the merger is completed, IHS stockholders will each receive from the exchange agent instructions on how to surrender their book-entry shares in exchange for the merger consideration.

 

Q: Who is the exchange agent for the merger?

 

A: Computershare Inc., is the exchange agent.

 

Q: When do you expect the merger to be completed?

 

A: Markit and IHS intend to complete the merger as soon as reasonably practicable and are currently targeting completion of the merger during the second half of 2016. However, the merger is subject to certain conditions, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. For additional information on the regulatory approvals and clearances required to complete the merger, see the section entitled “The Merger Agreement—Regulatory Approvals” beginning on page 117. For additional information on the conditions to completion of the merger, see the section entitled “The Merger Agreement—Description of the Merger Agreement—Conditions to Completion of the Merger” beginning on page 132.

 

Q: What effects will the merger have on Markit and IHS?

 

A: Upon completion of the merger, IHS will cease to have its common stock traded publicly. Merger Sub will merge with and into IHS, with IHS surviving the merger as an indirect and wholly owned subsidiary of Markit. Following completion of the merger, the registration of the IHS common stock and the reporting obligations of IHS with respect to its common stock under the Exchange Act will be terminated. In addition, upon completion of the merger, shares of IHS common stock will no longer be listed on the NYSE or any other stock exchange or quotation system. Although current IHS stockholders will no longer be stockholders of IHS, they will have an indirect interest in IHS through their ownership of Markit common shares. Upon completion of the merger, IHS Markit common shares will be listed on the NASDAQ.

 

Q: What are the conditions to the completion of the merger?

 

A: In addition to the adoption of the merger agreement by the IHS stockholders, and the approval of the Markit share issuance, the Markit amended bye-laws and the Markit name change by the Markit shareholders, the completion of the merger is subject to the satisfaction or waiver of a number of other conditions, including:

 

    the receipt of certain regulatory approvals and clearances, including (i) the termination or expiration of any applicable waiting period under the HSR Act (termination of such waiting period was granted on April 20, 2016) and (ii) approval from the German Bundeskartellamt (Federal Cartel Office (“BKartA”)) without the imposition of any regulatory material adverse effect (as defined in the merger agreement) (BKartA cleared the merger on May 2, 2016);

 

v


Table of Contents
    the absence of certain governmental restraints or prohibitions preventing the consummation of the merger or imposing a regulatory material adverse effect;

 

    the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of any stop order or proceeding seeking a stop order; and

 

    the approval for listing by the NASDAQ of the Markit common shares to be issued in connection with the merger, subject to official notice of issuance.

For additional information on the regulatory approvals and clearances required to complete the merger, see the section entitled “The Merger Agreement—Regulatory Approvals” beginning on page 117. For additional information on the conditions to completion of the merger, see the section entitled “The Merger Agreement—Description of the Merger Agreement—Conditions to Completion of the Merger” beginning on page 132.

 

Q: What will happen to outstanding Markit equity awards in the merger?

 

A: All Markit equity awards will remain outstanding in accordance with the terms and conditions under the applicable plan and award agreement in effect immediately prior to the effective time, including amendments to such terms and conditions that have been adopted in connection with the merger. For additional information on these amended terms and conditions, see the section entitled “The Merger Agreement—Interests of Markit Directors and Executive Officers in the Merger” beginning on page 95.

 

Q: What will happen to outstanding IHS equity awards in the merger?

 

A: The merger agreement generally provides for the conversion of IHS restricted stock unit awards, IHS deferred stock units and IHS performance-based vesting stock unit awards into corresponding awards for a number of IHS Markit common shares, rounded up to the nearest whole share, determined by multiplying the number of shares of IHS common stock subject to each IHS award by the exchange ratio. For certain performance-based vesting stock unit awards, the number of units so converting will be based on the specified percentage applicable to the underlying award. The converted awards will be subject to the same terms and conditions as the original IHS awards, except that certain performance-based vesting stock unit awards will become time-based vesting awards that vest on the February 1 following the expiration of the applicable performance period. For additional information on the treatment of IHS equity awards, see the section entitled “The Merger Agreement—Treatment of IHS Equity Awards” beginning on page 118.

 

Q: Are there any risks in the merger that I should consider?

 

A: Yes. There are risks associated with all mergers. These risks are discussed in more detail in the section entitled “Risk Factors” beginning on page 28 and you should also refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27.

 

Q: Are IHS stockholders entitled to appraisal rights?

 

A: No. Under the DGCL, no appraisal rights are available to IHS stockholders in connection with the merger.

 

Q: Are Markit shareholders entitled to appraisal rights?

 

A: No. Under the Bermuda Act, no appraisal rights are available to Markit common shareholders in connection with the merger.

 

Q: What are the U.S. federal income tax consequences of the merger to U.S. holders of shares of IHS common stock?

 

A:

In general, subject to the discussion below relating to the potential application of Section 304 of the Code under “The Merger Agreement—Certain U.S. Federal Income Tax Consequences” beginning on page 103 of this proxy statement/prospectus, a U.S. holder of IHS common stock will recognize gain or loss equal to the difference between (i) the fair market value of the IHS Markit common shares received by such

 

vi


Table of Contents
  U.S. holder in the merger (including any cash received in lieu of fractional IHS Markit common shares) and (ii) its aggregate tax basis in the IHS common stock surrendered in the merger.

 

Q: What are the U.S. federal income tax consequences of the merger to U.S. holders of Markit common shares?

 

A: There are no U.S. federal income tax consequences of the merger to U.S. holders of Markit common shares, unless they also hold IHS common stock.

About the Special Meetings

 

Q: When and where will the special meetings be held?

 

A: Markit. The Markit special meeting will be held at Davis Polk & Wardwell, 5 Aldermanbury Square, London EC2V 7HR, England, on July 11, 2016, at 4:00 p.m., London time.

IHS. The IHS special meeting will be held at IHS Corporate Headquarters, 15 Inverness Way East, Englewood, Colorado 80112, on July 11, 2016, at 9:00 a.m., Mountain Daylight Time.

 

Q: Who is entitled to vote at the special meetings?

 

A: Only holders of record of Markit common shares at the close of business on June 10, 2016, the record date for voting at the Markit special meeting, are entitled to vote at the Markit special meeting.

Only holders of record of IHS common stock at the close of business on June 10, 2016, the record date for voting at the IHS special meeting, are entitled to vote at the IHS special meeting.

 

Q: How can I attend the Markit special meeting?

 

A: All shareholders will need proof of ownership of shares in Markit, and may be asked to present a form of personal photo identification, in order to be admitted to the Markit special meeting. In addition, if your shares are held in the name of your broker, bank, or other nominee and you wish to attend the Markit special meeting, you must bring an account statement or letter from the broker, bank, or other nominee indicating that you were the owner of the shares on the Markit record date.

 

Q: How can I attend the IHS special meeting?

 

A: Each stockholder of record has the opportunity to vote in person at the IHS special meeting. You will need to bring picture identification to the meeting. If you own shares in street name (i.e., your shares are held in street name through a broker, bank, trustee or other nominee), please bring your most recent brokerage statement, along with picture identification, to the meeting. IHS will use your brokerage statement to verify your ownership of IHS common stock and admit you to the meeting. Shares held in your name as the stockholder of record may be voted by you in person at the IHS special meeting. Shares held beneficially in street name may be voted by you in person at the IHS special meeting only if you obtain a legal proxy from the broker or other agent that holds your shares giving you the right to vote the shares and bring such proxy to the IHS special meeting.

 

Q: What proposals will be considered at the Markit special meeting?

 

A:

At the Markit special meeting, Markit shareholders will be asked to consider and vote on (i) a proposal to approve the issuance of Markit common shares as merger consideration, which we refer to as the Markit share issuance proposal, (ii) a proposal to approve amending and restating the bye-laws of Markit to be effective upon completion of the merger, which we refer to as the Markit amended bye-laws proposal, (iii) a proposal to approve the name change of “Markit Ltd.” to “IHS Markit Ltd.” for registration upon completion of the merger, which we refer to as the Markit name change proposal and (iv) a proposal to adjourn the Markit special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Markit share issuance proposal, the Markit amended bye-laws proposal or the

 

vii


Table of Contents
  Markit name change proposal, which we refer to as the Markit adjournment proposal. Markit will transact no other business at its special meeting except such business as may be properly brought before the Markit special meeting or any adjournment or postponement thereof.

 

Q: What proposals will be considered at the IHS special meeting?

 

A: At the IHS special meeting, IHS stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the IHS merger proposal, (ii) a non-binding, advisory proposal to approve the compensation that may become payable to IHS’s named executive officers in connection with the consummation of the merger, which we refer to as the IHS compensation proposal, and (iii) a proposal to adjourn the IHS special meeting, if necessary or appropriate, to obtain additional proxies if there are not sufficient votes to approve the IHS merger proposal, which we refer to as the IHS adjournment proposal. IHS will transact no other business at its special meeting except such business as may properly be brought before the IHS special meeting or any adjournment or postponement thereof.

 

Q: What are the Markit amended bye-laws?

 

A: In connection with the transactions contemplated by the merger agreement, Markit is amending and restating its bye-laws to reflect certain governance provisions including, among other things, the planned succession for IHS Markit’s CEO and Chairman of the Board, to be implemented at the effective time.

 

Q: How does the Markit board recommend that I vote?

 

A: The Markit board unanimously approved the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Markit. The Markit board, subject to the requisite shareholder approvals, unanimously approved the Markit share issuance, the Markit amended bye-laws and the Markit name change.

The Markit board unanimously recommends that the Markit shareholders vote:

 

    “FOR” the Markit share issuance proposal;

 

    “FOR” the Markit amended bye-laws proposal;

 

    “FOR” the Markit name change proposal; and

 

    “FOR” the Markit adjournment proposal.

 

Q: How does the IHS board recommend that I vote?

 

A: The IHS board unanimously approved the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and fair to and in the best interests of IHS and its stockholders.

The IHS board unanimously recommends that the IHS stockholders vote:

 

    “FOR” the IHS merger proposal;

 

    “FOR” the IHS compensation proposal; and

 

    “FOR” the IHS adjournment proposal.

 

Q: How do I vote?

 

A: If you are a holder of record of Markit common shares as of the close of business on the record date for the Markit special meeting or a holder of record of IHS common stock as of the close of business on the record date for the IHS special meeting, you may vote in person by attending the applicable special meeting or, to ensure your shares are represented at the applicable meeting, you may vote by:

 

    accessing the Internet website specified on your proxy card (if applicable);

 

viii


Table of Contents
    calling the toll-free number specified on your proxy card; or

 

    marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If your shares are held in street name, through a broker, bank, trustee or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

 

Q: What is a “broker non-vote”?

 

A: Under NYSE and NASDAQ rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares held of record by banks, brokerage firms or other nominees but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. “Non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation) and certain corporate governance proposals, even if management-supported. A “broker non-vote” occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such instructions. Because none of the proposals to be voted on at either the Markit special meeting or IHS special meeting are routine matters for which brokers may have discretionary authority to vote, Markit and IHS do not expect there to be any broker non-votes at the Markit special meeting or IHS special meeting.

 

Q: What vote is required to approve each Markit proposal?

 

A: Proposal to Approve the Markit Share Issuance by Markit Shareholders. Approving the Markit share issuance requires the affirmative vote of a majority of the votes cast at the Markit special meeting. Accordingly, a Markit shareholder’s failure to submit a proxy card or to vote in person at the Markit special meeting, an abstention from voting (which is not considered a vote cast), or a broker non-vote (which is not considered a vote cast) will have no effect on the outcome of any vote on the Markit share issuance proposal, assuming a quorum is present.

Proposal to approve the Markit Amended Bye-Laws by Markit Shareholders. Approving the Markit amended bye-laws requires the affirmative vote at the Markit special meeting of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date. Accordingly, a Markit shareholder’s failure to submit a proxy card or to vote in person at the Markit special meeting, an abstention from voting, or a broker non-vote will have the same effect as a vote “AGAINST” the Markit amended bye-laws proposal.

Proposal to approve the Markit Name Change by Markit Shareholders. Approving the Markit name change requires the affirmative vote of a majority of the votes cast at the Markit special meeting. Accordingly, a Markit shareholder’s failure to submit a proxy card or to vote in person at the Markit special meeting, an abstention from voting (which is not considered a vote cast) or a broker non-vote (which is not considered a vote cast) will have no effect on the outcome of any vote on the Markit name change proposal, assuming a quorum is present.

Proposal to Adjourn the Markit Special Meeting by Markit Shareholders. Approving an adjournment of the Markit special meeting (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the Markit share issuance, the Markit amended bye-laws or the Markit name change) requires the affirmative vote of a majority of the voting rights held by those shareholders present at the Markit special meeting, in person or by proxy. Accordingly, a Markit shareholder’s failure to vote in person at the Markit special meeting (if such Markit shareholder is present at such meeting), an abstention from voting, or a broker non-vote will have the same effect as a vote “AGAINST” the Markit adjournment proposal, while a Markit shareholder’s failure to submit a proxy card or to vote in person at the Markit special meeting will have no effect on the outcome of any vote on the Markit adjournment proposal (so long as such Markit shareholder is not present at the Markit special meeting).

 

ix


Table of Contents
Q: What vote is required to approve each IHS proposal?

 

A: Proposal to Adopt the Merger Agreement by IHS Stockholders. Approving the IHS merger proposal requires the affirmative vote of a majority of the outstanding shares of the IHS common stock entitled to vote on the IHS merger proposal. Accordingly, an IHS stockholder’s failure to submit a proxy card or to vote in person at the IHS special meeting, an abstention from voting, or a broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

Proposal Regarding Certain Merger-Related Executive Compensation Arrangements. In accordance with Section 14A of the Exchange Act, IHS is providing stockholders with the opportunity to approve, by non-binding advisory vote, compensation payments for IHS’s named executive officers in connection with the merger, as reported in the section of this joint proxy statement/prospectus entitled “IHS Proposal 2: The IHS Compensation Proposal” beginning on page 147. Approving the IHS compensation proposal, on a non-binding advisory basis, requires the affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter. Accordingly, abstentions and broker non-votes (which are not considered votes cast) and shares held by IHS stockholders not in attendance at, and who have not submitted a proxy for, the IHS special meeting, will have no effect on the outcome of any vote to approve, on a non-binding advisory basis, the IHS compensation proposal, assuming a quorum is present.

Proposal to Adjourn the IHS special meeting by IHS Stockholders. Approving the IHS adjournment proposal (if necessary or appropriate to obtain additional proxies if there are not sufficient votes to adopt the merger agreement) requires the affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter. Accordingly, abstentions and broker non-votes (which are not considered votes cast) and shares held by IHS stockholders not in attendance at, and who have not submitted a proxy for, the IHS special meeting, will have no effect on the outcome of any vote on the IHS adjournment proposal, assuming a quorum is present.

 

Q: How many votes do I have?

 

A: Markit. You are entitled to cast one vote for each Markit common share that you owned as of the close of business on the record date for the Markit special meeting. As of the close of business on May 31, 2016, there were 207,497,790 Markit common shares issued and outstanding entitled to vote at the Markit special meeting, including 25,219,470 shares held by the EBT.

IHS. You are entitled to cast one vote for each share of IHS common stock that you owned as of the close of business on the record date for the IHS special meeting. As of the close of business on the record date for the IHS special meeting, 67,452,437 shares of IHS common stock will be entitled to vote at the IHS special meeting.

 

Q: What is the EBT and how will shares held by the EBT be voted?

 

A: The Markit Group Holdings Limited Employee Benefit Trust (the “EBT”) is a discretionary trust established by a deed dated January 27, 2010 between Markit Group Holdings Limited and Elian Employee Benefit Trustee Limited (the “trustee”), as trustee of the EBT, through which shares and other benefits may be provided to Markit’s existing and former employees in satisfaction of their rights under any compensation or share incentive arrangements established by Markit. The trustee is an independent provider of fiduciary services, based in Jersey, Channel Islands.

Shares held by the EBT are held for issuance to satisfy equity awards under Markit’s employee plans, and will be available after closing to satisfy awards of IHS Markit to employees of the combined company. The combined company 57%/43% approximate ownership split between IHS stockholders and Markit shareholders, respectively, referred to in this joint proxy statement/prospectus is calculated based on IHS’s and Markit’s respective fully diluted shares as of the signing date and excluding the EBT shares.

 

x


Table of Contents

As of the Markit record date, 25,219,470 Markit common shares were held by the EBT. The trustee of the EBT may not vote any Markit common shares held by the EBT unless Markit directs otherwise. Markit intends to direct the EBT to vote the Markit common shares held by the EBT on each proposal at the Markit special meeting in accordance with the percentages voted by other holders of Markit common shares on such proposal.

 

Q: What will happen if I fail to vote or I abstain from voting?

 

A: Markit.

Proposal to Approve the Markit Share Issuance by Markit Shareholders. If you are a Markit shareholder and fail to vote, fail to instruct your broker or nominee to vote, or abstain, it will have no effect on the Markit share issuance proposal, assuming a quorum is present.

Proposal to Approve the Markit Amended Bye-Laws by Markit Shareholders. If you are a Markit shareholder and fail to vote, fail to instruct your broker or nominee to vote, or abstain, it will have the same effect as a vote “AGAINST” the Markit amended bye-laws proposal.

Proposal to Approve the Markit Name Change by Markit Shareholders. If you are a Markit shareholder and fail to vote, fail to instruct your broker or nominee to vote, or abstain, it will have no effect on the Markit name change proposal, assuming a quorum is present.

Proposal to Adjourn the Markit General Meeting by Markit shareholder. If you are a Markit shareholder and fail to vote in person at the Markit special meeting (if you are present at the Markit special meeting) or vote to abstain, it will have the same effect as a vote “AGAINST” the Markit adjournment proposal. If you are a Markit shareholder and fail to instruct your broker or nominee to vote or fail to submit a proxy card or to vote in person at the Markit special meeting, it will have no effect on the Markit adjournment proposal (so long as you are not present at the Markit special meeting).

IHS.

Proposal to Adopt the Merger Agreement by IHS Stockholders. If you are an IHS stockholder and fail to vote, fail to instruct a broker or other nominee to vote, or abstain, it will have the same effect as a vote “AGAINST” the IHS merger proposal.

Proposal Regarding Certain Merger-Related Executive Compensation Arrangements. If you are an IHS stockholder and fail to vote, fail to instruct your broker or nominee to vote, or abstain, it will have no effect on the IHS compensation proposal, assuming a quorum is present.

Proposal to Adjourn the IHS special meeting by IHS Stockholders. If you are an IHS stockholder and fail to vote, fail to instruct your broker or nominee to vote, or abstain, it will have no effect on the IHS adjournment proposal, assuming a quorum is present.

 

Q: What constitutes a quorum?

 

A: Markit. A quorum for action on any subject matter at any special meeting of Markit shareholders will exist when two or more persons present at the start of the Markit special meeting and representing in the aggregate in person or by proxy in excess of 50% of the total issued shares in Markit entitled to vote at the Markit special meeting (including the shares held by the EBT) shall form a quorum for the transaction of business at the Markit special meeting.

IHS. A quorum of stockholders is necessary to transact business at the IHS special meeting. A quorum exists if the holders of at least a majority of the shares of IHS common stock entitled to vote are present either in person or by proxy at the meeting. Abstentions and broker non-votes will be counted in determining whether a quorum exists. Because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting.

 

xi


Table of Contents
Q: If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?

 

A: No. If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee, that is, in “street name”, your broker, bank, trust company or other nominee cannot vote your shares on “non-routine” matters without instructions from you. You should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided by your broker, bank, trust company or other nominee to you. Please check the voting form used by your broker, bank, trust company or other nominee.

If you are a Markit shareholder and you do not provide your broker, bank, trust company or other nominee with instructions, your broker, bank, trust company or other nominee will not submit a proxy, your Markit common shares will not be counted for purposes of determining a quorum at the Markit special meeting, and will not be voted on any proposal.

If you are an IHS stockholder and you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy, your shares of IHS common stock will be counted for purposes of determining a quorum at the IHS special meeting, but will not be voted on any proposal on which your broker, bank, trust company or other nominee does not have discretionary authority.

 

Q: What will happen if I return my proxy card without indicating how to vote?

 

A: If you are a registered holder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Markit board, in the case of Markit common shares, or the IHS board, in the case of IHS common stock.

Please note that you may not vote shares held in street name by returning a proxy card directly to Markit or IHS, as applicable, or by voting in person at your special meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank, trust company or other nominee.

If you are a Markit shareholder and you do not instruct your broker on how to vote your Markit shares, your broker may not vote your Markit shares, which will have the same effect as a vote “AGAINST” the Markit amended bye-laws proposal, but will have no effect on the Markit share issuance proposal, the Markit name change proposal or the Markit adjournment proposal, assuming a quorum is present.

If you are an IHS stockholder and you do not instruct your broker on how to vote your IHS shares, your broker may not vote your IHS shares, which will have the same effect as a vote “AGAINST” the IHS merger proposal but will have no effect on the IHS adjournment proposal or the IHS compensation proposal, assuming a quorum is present. However, because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting.

 

Q: Can I change my vote after I have returned a proxy or voting instruction card?

 

A: Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of four ways, depending on whether you are a Markit shareholder or an IHS stockholder:

Markit Shareholders. You can change your vote or revoke your proxy at any time before it is exercised at the Markit special meeting by doing any of the following:

 

    filing with the Secretary of Markit prior to the Markit special meeting a written notice of revocation by mail to Markit Ltd., Attention: Company Secretary, c/o Markit Legal Department, 4th Floor, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England;

 

xii


Table of Contents
    submitting a duly executed proxy bearing a later date that Markit receives prior to the conclusion of voting at the Markit special meeting;

 

    attending the Markit special meeting and voting in person; or

 

    logging on to www.proxyvote.com in the same manner you would to submit your proxy electronically or calling (800) 690-6903, and in either case following the instructions to revoke or change your voting instructions.

Your attendance at the special meeting in and of itself will not revoke any proxy.

IHS Stockholders. You can change your vote or revoke your proxy at any time before it is exercised at the IHS special meeting by doing any of the following:

 

    you can submit a valid proxy with a later date;

 

    you can notify IHS’s Secretary in writing, at Secretary, IHS Inc., 15 Inverness Way East, Englewood, CO 80112, that you have revoked your proxy;

 

    you can call the telephone number specified on your proxy card, in each case following the instructions on your proxy card and to the extent you are eligible to do so; or

 

    you can vote in person by written ballot at the IHS special meeting.

 

Q: What happens if I transfer my Markit common shares or IHS common stock before the special meetings?

 

A: The record dates for the Markit and IHS special meetings are earlier than both the date of the special meetings and the date that the merger is expected to be completed. If you transfer your Markit or IHS shares after the applicable record date but before the applicable special meeting, you will retain your right to vote at the applicable special meeting. However, if you are an IHS stockholder, in order to receive the merger consideration you must hold your shares of IHS common stock through the completion of the merger.

 

Q: What if I hold shares in both Markit and IHS?

 

A: If you are both a Markit shareholder and an IHS stockholder, you will receive two separate packages of proxy materials. A vote cast as a Markit shareholder will not count as a vote cast as an IHS stockholder, and a vote cast as an IHS stockholder will not count as a vote cast as a Markit shareholder. Therefore, please separately submit a proxy for each of your Markit common shares and IHS common stock.

 

Q: Who is the inspector of election?

 

A: The Markit board has appointed a representative of Broadridge Financial Solutions, Inc., to act as the inspector of election at the Markit special meeting. The IHS board has appointed a representative from American Stock Transfer & Trust Company, LLC, to act as the inspector of election at the IHS special meeting.

 

Q: Where can I find the voting results of the special meetings?

 

A: The preliminary voting results are expected to be announced at the Markit and IHS special meetings. In addition, within four business days following certification of the final voting results, Markit intends to furnish on Form 6-K and IHS intends to file on Form 8-K the final voting results of its special meeting, in each case, with the SEC.

 

Q: What will happen if all of the proposals to be considered at the special meetings are not approved?

 

A:

As a condition to the completion of the merger, Markit shareholders must approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal and IHS stockholders must approve the IHS merger proposal. Completion of the merger is not conditioned or dependent on approval of any of the other proposals to be considered at the special meetings. Under

 

xiii


Table of Contents
  specified circumstances, Markit or IHS may be required to pay to, or be entitled to receive from, the other party a fee with respect to termination of the merger agreement, see “The Merger Agreement—Description of the Merger Agreement—Expenses and Termination Fees” beginning on page 134.

 

Q: Why are IHS stockholders being asked to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to IHS’s named executive officers in connection with the completion of the merger?

 

A: The rules promulgated by the SEC under Section 14A of the Exchange Act and the applicable SEC rules issued thereunder require IHS to seek a non-binding, advisory vote with respect to certain compensation that may be paid or become payable to IHS’s named executive officers in connection with the merger. For more information regarding such payments, see the section entitled “IHS Proposal 2: The IHS Compensation Proposal” beginning on page 147.

 

Q: What will happen if IHS stockholders do not approve, on a non-binding advisory basis, the payments to IHS’s named executive officers in connection with the completion of the merger?

 

A: The votes on the IHS compensation proposal are votes separate and apart from the votes on the IHS merger proposal. Accordingly, IHS stockholders may vote in favor of the IHS merger proposal and not in favor of the IHS compensation proposal, or vice versa. Approval of the IHS compensation proposal is not a condition to consummation of the merger, and it is advisory in nature only, meaning it will not be binding on IHS.

 

Q: What do I need to do now?

 

A: Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes.

If you are a holder of record, in order for your shares to be represented at your special meeting, you must:

 

    attend your special meeting in person;

 

    vote through the Internet (if applicable) or by telephone by following the instructions included on your proxy card; or

 

    indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope.

If you hold your shares in street name, in order for your shares to be represented at your special meeting, you should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided to you by your broker, bank, trust company or other nominee.

 

Q: Who can help answer my questions?

 

A: Markit shareholders or IHS stockholders who have questions about the merger agreement, the merger or the other matters to be voted on at the special meetings, who need assistance submitting their proxy or voting shares or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:

 

if you are a Markit shareholder:

Morrow Sodali Global LLC

470 West Avenue

Stamford, CT 06902

All locations: (877) 815-6525

 

if you are an IHS stockholder:

D.F. King & Co., Inc.
48 Wall Street, 22nd Floor

New York, New York 1005
All locations: (866) 416-0553
Email: IHS@dfking.com

 

xiv


Table of Contents

SUMMARY

This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all the information that is important to you. Markit and IHS urge you to read carefully the remainder of this joint proxy statement/prospectus, including the attached annexes and the other documents to which we refer you herein and documents incorporated by reference into this joint proxy statement/prospectus, as this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the applicable special meeting. See also the section entitled “Where You Can Find More Information” beginning on page 201. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies

Markit Ltd. (See page 43)

Markit Ltd.

4th Floor, Ropemaker Place

25 Ropemaker Street

London EC2Y 9LY

England

Telephone: +44 20 7260 2000

Markit, founded in 2003, is a leading global provider of financial information services. Markit provides products that enhance transparency, reduce risk and improve operational efficiency. Markit’s customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Markit employs over 4,200 people in 13 countries.

Markit’s headquarters and principal executive offices are located at 4th Floor, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England. Markit maintains a registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

Markit common shares are listed on the NASDAQ under the symbol “MRKT”.

Additional information about Markit and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

IHS Inc. (See page 43)

IHS Inc.

15 Inverness Way East

Englewood, CO 80112

Telephone: (303) 397-2969

IHS Inc. (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 140 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs nearly 9,000 people in 33 countries around the world.

 



 

1


Table of Contents

IHS Class A common stock is listed on the NYSE under the symbol “IHS”.

Additional information about IHS and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

Marvel Merger Sub, Inc. (See page 43)

Marvel Merger Sub, Inc.

c/o Markit North America, Inc.

620 Eighth Avenue, 35th Floor

New York, NY 10018

Marvel Merger Sub, Inc., which we refer to as Merger Sub, is a Delaware corporation and an indirect and wholly owned subsidiary of Markit that was formed on October 23, 2015. To date, Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the merger. Pursuant to the merger agreement, Merger Sub will be merged with and into IHS, with IHS surviving the merger as an indirect and wholly owned subsidiary of Markit.

The Merger and the Merger Agreement

A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus. Markit and IHS encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see the section entitled “The Merger Agreement” beginning on page 55.

Effects of the Merger (See page 55)

The organization of Markit and IHS (simplified) before and after the merger is illustrated on this page and the following page:

Prior to the Merger

 

 

LOGO

 



 

2


Table of Contents

The Merger

 

 

LOGO

After the Merger

 

 

LOGO

 



 

3


Table of Contents

Merger Consideration (See page 121)

Subject to the terms and conditions set forth in the merger agreement, at the effective time, each share of IHS common stock issued and outstanding immediately prior to the effective time will be cancelled and each holder of such shares of the IHS common stock will have the right to receive 3.5566 fully paid and nonassessable Markit common shares, together with cash in lieu of fractional Markit common shares, based on then prevailing market prices, without interest, which we refer to as the merger consideration. In addition, each share of common stock of Merger Sub, par value $0.01 per share, issued and outstanding immediately prior to the effective time will be cancelled and, in exchange for the cancellation and the funding of the merger consideration by Markit, IHS, as the surviving corporation in the merger will issue an equivalent number of fully paid and non-assessable shares of common stock, par value $0.01 per share, all of which shares shall be held by a subsidiary of Markit, and which shall constitute the only outstanding shares of common stock of IHS, as the surviving corporation, immediately following the effective time.

The merger agreement provides that the merger consideration will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, share consolidation, share subdivision, share bonus issue or stock dividend (including any dividend or distribution of securities convertible into the IHS common stock or Markit common shares, as applicable), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of shares of IHS common stock or Markit common shares issued and outstanding after the date hereof and prior to the effective time. However, the merger agreement does not contain any provision that would adjust the exchange ratio based on the fluctuations in the market value of either the Markit common shares or IHS common stock. Because of this, the implied value of consideration to the IHS stockholders may fluctuate between now and the completion of the merger. The value of the consideration to IHS stockholders will depend on the market value of Markit common shares at the time the merger is completed.

On March 18, 2016, the last trading day prior to the public announcement of the proposed merger, the closing price of Markit common shares on NASDAQ was $26.80 per share. On June 3, 2016, the latest practicable date before the date of this joint proxy statement/prospectus, the closing price of Markit common shares on the NASDAQ was $33.96 per share. We urge you to obtain current market quotations before voting your shares.

Treatment of Markit Equity Awards (See page 95)

All Markit equity awards will remain outstanding in accordance with the terms and conditions under the applicable plan and award agreement in effect immediately prior to the effective time, including amendments to such terms and conditions that have been adopted in connection with the merger. For additional information on these amended terms and conditions, see the section entitled “The Merger Agreement—Interests of Markit Directors and Executive Officers in the Merger” beginning on page 95.

Treatment of IHS Equity Awards (See page 118)

The merger agreement provides that, as of the effective time:

 

    each IHS restricted stock unit award, which we refer to as an IHS RSU Award, that is outstanding immediately prior to the effective time will automatically be converted into a corresponding award (on the terms and conditions under the applicable award agreement in effect immediately prior to the effective time) on a number of IHS Markit common shares, rounded up to the nearest whole share, determined by multiplying the number of shares of IHS common stock subject to such IHS RSU Award by the exchange ratio;

 

   

each IHS performance-based vesting stock unit award, which we refer to as an IHS PSU Award, that is outstanding immediately prior to the effective time will automatically be converted into a

 



 

4


Table of Contents
 

corresponding award (on the terms and conditions under the applicable award agreement in effect immediately prior to the effective time) on a number of IHS Markit common shares, rounded up to the nearest whole share, determined by multiplying the number of shares of IHS common stock subject to such IHS PSU Award (which number depends on the underlying IHS PSU Award) by the exchange ratio; and the awards so converting will become time-based vesting units vesting on the February 1st following the expiration of the applicable performance period (unless otherwise provided under the merger agreement); and

 

    each IHS deferred stock unit, which we refer to as an IHS DSU Award, that is outstanding immediately prior to the effective time will automatically be converted into a corresponding award (on the terms and conditions under the applicable award agreement in effect immediately prior to the effective time) on a number of IHS Markit common shares, rounded up to the nearest whole share, determined by multiplying the number of shares of IHS common stock subject to such IHS DSU Award by the exchange ratio.

U.S. Federal Income Tax Consequences (See page 103)

In general, subject to the discussion below relating to the potential application of Section 304 of the Code under “The Merger Agreement—Certain U.S. Federal Income Tax Consequences” beginning on page 103 of this joint proxy statement/prospectus, a U.S. holder of IHS common stock will recognize gain or loss equal to the difference between (i) the fair market value of the IHS Markit common shares received by such U.S. holder in the merger (including any cash in lieu of fractional IHS Markit common shares) and (ii) its aggregate tax basis in the IHS common stock surrendered in the merger. A non-U.S. holder of IHS common stock generally will not be subject to U.S. federal income tax on any gain recognized in the merger other than in certain specific circumstances (including as a result of the potential application of Section 304 of the Code), as further described under “The Merger Agreement—Certain U.S. Federal Income Tax Consequences—Tax Consequences to Non-U.S. Holders of the Receipt of IHS Markit Common Shares” beginning on page 108 of this joint proxy statement/prospectus.

Please carefully review the information set forth in the section entitled “The Merger Agreement—Certain U.S. Federal Income Tax Consequences” beginning on page 103 for a discussion of certain U.S. federal income tax consequences of the merger. Please consult your own tax advisors as to the specific tax consequences to you of the merger.

Markit’s Reasons for the Merger; Recommendation of the Markit Board (See page 64)

After careful consideration, the Markit board, on March 19, 2016, unanimously approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Markit. The Markit board also, subject to the requisite shareholder approvals, unanimously approved the Markit share issuance, the Markit amended bye-laws and the Markit name change. For factors considered by the Markit board in reaching its decision to approve the merger agreement, see the section entitled “The Merger Agreement—Markit’s Reasons for the Merger; Recommendation of the Markit Board” beginning on page 64. The Markit board unanimously recommends that Markit shareholders vote “FOR” each of the Markit share issuance proposal, the Markit amended bye-laws proposal; the Markit name change proposal and the Markit adjournment proposal.

IHS’s Reasons for the Merger; Recommendation of the IHS Board (See page 67)

After careful consideration, the IHS board, on March 19, 2016, unanimously approved the merger agreement and determined that entering into the merger agreement and consummating the transactions

 



 

5


Table of Contents

contemplated thereby are advisable and fair to, and in the best interests of, IHS and its stockholders. For factors considered by the IHS board in reaching its decision to approve the merger agreement, see the section entitled “The Merger Agreement—IHS’s Reasons for the Merger; Recommendation of the IHS Board” beginning on page 68. The IHS board unanimously recommends that the IHS stockholders vote “FOR” each of the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal.

Opinion of Markit’s Financial Advisor (See page 81)

Markit retained J.P. Morgan to act as its financial advisor in connection with the merger. At the meeting of the Markit board on March 19, 2016, J.P. Morgan rendered its oral opinion to the Markit board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to Markit. J.P. Morgan confirmed its March 19, 2016 oral opinion by delivering its written opinion to the Markit board, dated March 20, 2016, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to Markit.

The full text of the written opinion of J.P. Morgan dated March 20, 2016, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Appendix C to this joint proxy statement/prospectus. Markit’s shareholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Markit board (in its capacity as such) in connection with and for the purposes of its evaluation of the merger, was directed only to the exchange ratio in the merger and did not address any other aspect of the merger. The opinion does not constitute a recommendation to any shareholder of Markit as to how such shareholder should vote with respect to the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal, the Markit adjournment proposal or any other matter.

For further information, see the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Opinion of Markit’s Financial Advisor” beginning on page 81 of this joint proxy statement/prospectus and Annex C.

Opinion of IHS’s Financial Advisor (See page 87)

Goldman Sachs, delivered its opinion to the IHS board that, as of March 20, 2016 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio of 3.5566 Markit common shares to be paid for each issued and outstanding share of IHS common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Markit and its affiliates) of shares of IHS common stock.

The full text of the written opinion of Goldman Sachs, dated March 20, 2016, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D. Goldman Sachs provided its opinion for the information and assistance of the IHS board in connection with its consideration of the combination. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of IHS common stock should vote with respect to the combination or any other matter. Pursuant to an engagement letter between IHS and Goldman Sachs, IHS has agreed to pay Goldman Sachs a transaction fee of $3.5 million, which may be increased in an amount to be determined by IHS in its sole discretion, $1 million of which became payable upon execution of the merger agreement on March 20, 2016 and the remainder of which is payable upon consummation of the combination.

For further information, see the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Opinion of IHS’s Financial Advisor” beginning on page 87 of this joint proxy statement/prospectus and Annex D.

In addition, M. Klein separately evaluated the transaction, but did not render a fairness opinion as to any matter or present any separate financial analyses.

 



 

6


Table of Contents

Interests of Markit Directors and Executive Officers in the Merger (See page 95)

In considering the recommendation of the Markit board that you vote to approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal, you should be aware that Markit’s directors and executive officers have certain financial interests in the merger that may be different from, or in addition to, those of Markit shareholders generally. The Markit board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to you that you vote to approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal. See “The Merger Agreement—Interests of Markit Directors and Executive Officers in the Merger” beginning on page 95.

Interests of IHS Directors and Executive Officers in the Merger (See page 97)

In considering the recommendation of the IHS board that you vote to approve the IHS merger proposal, you should be aware that IHS’s directors and executive officers have certain financial interests in the merger that may be different from, or in addition to, those of IHS stockholders generally. The IHS board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to you that you vote to approve the adoption of the merger agreement. See “The Merger Agreement—Interests of IHS Directors and Executive Officers in the Merger” beginning on page 97.

Certain Governance Matters Following the Merger (See page 101); Markit Amended Bye-Laws (See page 138)

Pursuant to the terms of the merger agreement, Markit and IHS have agreed to certain governance related matters. Additional governance related matters agreed to by Markit and IHS are set forth in the proposed Markit amended bye-laws, the approval of which by Markit shareholders is a condition to the closing.

The IHS Markit Chairman and Chief Executive Officer

The merger agreement provides that, as of the effective time, (i) Mr. Stead will serve as Chairman and Chief Executive Officer of the combined company and (ii) Mr. Uggla will serve as President of the combined company. The merger agreement further provides that if, as of the effective time, Mr. Stead is unwilling or unable to serve as Chairman and Chief Executive Officer of the combined company, Mr. Uggla will serve as Chairman and Chief Executive Officer.

Pursuant to the Markit amended bye-laws, Mr. Stead will serve as the Chairman of the IHS Markit board and Chief Executive Officer of the combined company until the first date on which Mr. Stead is not the Chairman, a director and the Chief Executive Officer of the combined company (such date not being later than December 31, 2017, and which we refer to as the “change date”), unless otherwise determined by an affirmative vote of not less than 75% of the IHS Markit board then in office (which we refer to as “supermajority approval”). Effective as of the change date, Mr. Uggla will be appointed the Chairman of the IHS Markit board and Chief Executive Officer of the combined company, unless otherwise determined by supermajority approval (excluding the vote of Mr. Uggla).

The IHS Markit board

Under the terms of the merger agreement, at the effective time, the IHS Markit board will initially consist of eleven directors, six of whom will be IHS designees (each of which we refer to as an “IHS designee”), and five of whom will be Markit designees (each of which we refer to as a “Markit designee”), with each class of directors to be made up, as near as possible, of an equal number of IHS designees and Markit designees. If, as of the effective time, Mr. Stead is unwilling or unable to serve as a director, and effective as of the change date, the number of directors of the combined company will be reduced to ten, consisting of five IHS designees and five

 



 

7


Table of Contents

Markit designees, unless otherwise determined by supermajority approval. The Markit amended bye-laws provide that, prior to the change date, unless otherwise determined by supermajority approval, the IHS Markit board will consist of eleven directors.

The Markit amended bye-laws provide that, prior to the change date, if any IHS designee or Markit designee can no longer serve as a director of the combined company due to death, disability, disqualification or resignation, the remaining IHS designees (if the departing director is an IHS designee) or Markit designees (if the departing director is a Markit designee), will appoint his or her successor, in each case, acting by the affirmative vote of a majority of such remaining IHS designees or Markit designees, as applicable. The Markit amended bye-laws also provide that, prior to the change date, for any director election to occur by resolution of the IHS Markit shareholders, any person proposed or nominated by the IHS Markit board to replace an IHS designee will require the approval of the remaining IHS designees and any person proposed or nominated by the IHS Markit board to replace a Markit designee will require the approval of the remaining Markit designees, in each case, acting by the affirmative vote of such remaining IHS designees or remaining Markit designees, as applicable.

Additionally, Markit and IHS have agreed in the merger agreement to cooperate to cause, effective as of the effective time (and at all times prior to the change date, unless otherwise determined by supermajority approval, the Markit amended bye-laws require), each committee of the IHS Markit board to be comprised of an equal number of directors selected by each of Markit and IHS.

The Markit amended bye-laws also provide that the IHS Markit board will have a lead director, who, among other things, will serve as chairman of board meetings in the absence of the chairman and will serve as the liaison between the non-management directors and the management directors and that, prior to the change date, unless otherwise determined by supermajority approval, the lead director will be a Markit designee.

IHS Markit Headquarters

Under the terms of the Markit amended bye-laws, following the effective time, unless otherwise determined by supermajority approval prior to the change date or by the IHS Markit board from and after the change date, the headquarters of IHS Markit, including its principal executive offices, will be located in London, England.

Amendments

The Markit amended bye-laws also provide that no amendment of the provisions of the Markit amended bye-laws described above may be rescinded, altered or amended prior to the change date, and no new bye-law may be made which would have the effect of rescinding, altering or amending the provisions of such bye-laws prior to the change date, until the same has been approved by supermajority approval and by a resolution of IHS Markit shareholders including the affirmative vote of not less than 66 2/3% of the votes attaching to all shares in issue.

* * *

A copy of the Markit amended bye-laws is attached as Annex B to this joint proxy statement/prospectus. Markit and IHS encourage you to read the Markit amended bye-laws carefully because it will be the principal document governing the combined company from and after the effective time. For more information on the Markit amended bye-laws, see the section entitled “Markit Amended Bye-Laws” beginning on page 138.

Regulatory Approvals Required to Complete the Merger (See page 117)

United States Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder by the U.S. Federal Trade Commission (the “FTC”), which we

 



 

8


Table of Contents

refer to as the HSR Act, the merger cannot be consummated until, among other things, notifications have been filed and certain information has been furnished to the FTC and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”), and specified waiting period requirements have been satisfied. On April 1, 2016, each of Markit and IHS filed a Notification and Report Form pursuant to the HSR Act (“HSR Notification”) with the Antitrust Division and the FTC.

On April 20, 2016, early termination of the waiting period under the HSR Act was granted in connection with the merger.

Other Regulatory Clearances

Markit and IHS derive revenues in other jurisdictions where merger control filings or clearances are or may be required or advisable, including merger control clearance by the BKartA. The merger cannot be consummated until after such clearance by the BKartA has been received. Markit and IHS submitted the German merger control filing to BKartA on April 5, 2016.

On May 2, 2016, BKartA provided clearance in writing for the merger to be consummated.

Markit and IHS have agreed to use their reasonable best efforts to take, or cause to be taken, all actions necessary, proper or advisable under applicable antitrust laws and regulations, including the HSR Act and other applicable state or foreign antitrust laws, to complete and effect the merger as soon as possible following the date of the merger agreement.

Completion of the Merger

We are currently targeting completion of the merger during the second half of 2016, subject to the receipt of required shareholder and stockholder approvals and regulatory approval and clearances and the satisfaction or waiver of the other closing conditions. It is possible that factors outside the control of Markit or IHS could result in the merger being completed at a later time or not at all.

Conditions to Completion of the Merger (See page 132)

The obligations of each of Markit and IHS to effect the merger is subject to the satisfaction or waiver of the following conditions:

 

    the waiting period (and any extension thereof) applicable to the merger under the HSR Act shall have been terminated or shall have expired (such waiting period was terminated on April 20, 2016);

 

    all applicable waiting periods (or extensions thereof) or necessary approvals relating to the merger under applicable German law shall have expired, been terminated or received, in each case without the imposition of any regulatory material adverse effect (approval from BKartA was granted on May 2, 2016);

 

    the absence of any judgment, order, law or other legal restraint by a court or other governmental entity in certain jurisdictions as mutually agreed by Markit and IHS, that prevents the consummation of the merger or imposes a regulatory material adverse effect;

 

    the SEC having declared effective the registration statement of which this joint proxy statement/prospectus forms a part, and the absence of a stop order or proceedings seeking a stop order;

 

    the approval for listing by the NASDAQ, subject to official notice of issuance, of the Markit common shares issuable to the holders of IHS common stock in connection with the merger;

 



 

9


Table of Contents
    the representation and warranty of the other party relating to the absence of a material adverse effect since November 30, 2015 (in the case of IHS) and December 31, 2015 (in the case of Markit) being true and correct as of the closing date;

 

    certain representations and warranties of the other party relating to capital structure being true and correct as of the closing date except for exceptions that are de minimis in the aggregate;

 

    certain representations and warranties of the other party relating to organization, standing, corporate power, authority, capital structure and inapplicability of state antitakeover statutes being true and correct in all material respects as of the closing date (except to the extent such representations and warranties expressly relate to a specific date or as of the date of the merger agreement, in which case such representations and warranties must be true and correct in all material respects as of such date);

 

    each other representation and warranty of the other party (without giving effect to any limitation as to materiality, material adverse effect or any provisions contained therein relating to preventing or materially delaying the consummation of any of the transactions contemplated by the merger agreement) being true and correct as of the closing date (except to the extent such representations and warranties relate to a specific date or as of the date of the original merger agreement, in which case such representations and warranties must be true and correct as of such date), except where the failure of such representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate with respect to all such failures, a material adverse effect on such party;

 

    the other party having performed in all material respects all obligations required to be performed by it under the merger agreement; and

 

    the receipt of an officer’s certificate executed by an executive officer of the other party certifying that the conditions in the five preceding bullet points have been satisfied.

We cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

No Solicitation of Alternative Proposals (See page 127)

Markit and IHS have each agreed not to, and not to authorize or permit any of its controlled affiliates or any of its or their officers, directors or employees to, and to use its reasonable best efforts to cause any investment banker, financial advisor, attorney, accountant or other representative retained by it or any of its controlled affiliates not to, directly or indirectly, (i) solicit, initiate or knowingly encourage (including by way of furnishing information), or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any alternative transaction (as defined on page 128) or (ii) participate in any discussions or negotiations, or cooperate in any way with any person (or group of persons), with respect to any inquiries regarding, or the making of, any proposal the consummation of which would constitute an alternative transaction, except to notify such person or group of persons as to the existence of the provisions of the merger agreement summarized in this section.

Notwithstanding these restrictions, the merger agreement provides that, if at any time prior to obtaining approval of its stockholders, Markit or IHS receives a proposal that its board of directors determines in good faith (after consultation with outside counsel and a financial advisor of nationally recognized reputation) constitutes or could reasonably be expected to result in a superior proposal (as defined on page 128) and which did not result from a material breach of the non-solicitation obligations set forth in the merger agreement, then Markit or IHS, as applicable, may (i) furnish information about itself and its subsidiaries to the person (or group of persons) making such proposal pursuant to a customary confidentiality agreement containing terms as to confidentiality

 



 

10


Table of Contents

generally no less restrictive than the terms of the confidentiality agreement entered into between Markit and IHS and (ii) participate in discussions or negotiations regarding such proposal with the person (or group of persons) making such proposal.

Markit and IHS have each also agreed to (i) notify the other party promptly, and in any event within 24 hours of receipt, of any request for information or of any proposal relating to an alternative transaction, the material terms and conditions of such request or proposal (including any changes thereto) and the identity of the person making such request or proposal; (ii) keep the other party reasonably informed of the status and details (including amendments or proposed amendments) of any such request or proposal on a current basis; and (iii) provide the other party, as soon as reasonably practicable, copies of all correspondence and other written materials exchanged with the person making the proposal that describes in any material respect any of the material terms or conditions of any such request or proposal.

Changes in Board Recommendations (See page 128)

Markit and IHS have agreed under the merger agreement to, through their respective boards of directors, in the case of Markit, recommend approval to its shareholders of the Markit share issuance, the Markit amended bye-laws and the Markit name change, and in the case of IHS, recommend approval to its stockholders of the merger, and in the case of both Markit and IHS, to include such recommendations in this joint proxy statement/prospectus.

The merger agreement provides that, subject to the exceptions described below, neither the Markit board nor the IHS board will (i) effect a board recommendation change (as defined on page 129, (ii) approve or recommend, or propose publicly to approve or recommend, any alternative transaction or (iii) enter into, or cause any of its controlled affiliates to enter into, any letter of intent, agreement in principle, acquisition agreement or other agreement related to any alternative transaction, or requiring, or reasonably likely to cause, it to terminate, delay or fail to consummate, or that would otherwise impede, interfere with or be inconsistent with, the consummation of the merger or any of the other transactions contemplated by the merger agreement (other than a confidentiality agreement otherwise permitted by the merger agreement).

Notwithstanding the foregoing restrictions, at any time prior to obtaining the relevant shareholder or stockholder approval, the Markit board or the IHS board, as applicable, may, if it determines in good faith, after it has received a superior proposal (as defined on page 128) (and after consultation with outside counsel and a financial advisor of nationally recognized reputation) that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties under applicable law, effect a board recommendation change. However, such board of directors may not take any such action unless it has given the other party at least four business days’ written notice specifying the material terms and conditions of such proposal, identifying the person making such proposal and stating that it intends to take such action, or in the event of a subsequent modification to the material terms and conditions of such superior proposal, at least two business days’ written notice advising such other party of the modification to such terms and conditions; provided that during such four or two business day notice period, as applicable, such party engages (to the extent requested by the other party) in good faith negotiations with the other party to amend the merger agreement in such a manner that the proposal to enter into an alternative transaction no longer constitutes a superior proposal.

Termination of the Merger Agreement (See page 133)

The merger agreement may be terminated at any time prior to the effective time, whether before or after receipt of the required stockholder approvals, under the following circumstances:

 

    by mutual written consent of Markit and IHS; or

 



 

11


Table of Contents
    by either Markit or IHS:

if the merger is not consummated by November 30, 2016, which we refer to as the outside date (except that if the closing shall not have occurred by such date and all conditions have been satisfied or waived (other than the antitrust conditions and those that by their terms are to be fulfilled at closing) then either Markit or IHS may elect to extend such date to February 28, 2017); provided that this right to terminate the merger agreement will not be available to a party whose failure to perform any of its material obligations under the merger agreement has been the primary cause of, or primarily resulted in, the failure of the merger to be consummated by such time;

if the IHS required stockholder approval has not been obtained by reason of the failure to obtain the required vote at a duly convened IHS stockholders meeting or any adjournment or postponement thereof; or

if the Markit required shareholder approvals have not been obtained by reason of the failure to obtain the required vote at a duly convened Markit shareholders meeting or any adjournment or postponement thereof.

In addition, the merger agreement may be terminated by Markit or IHS, at any time prior to the other party’s special meeting, if a triggering event (as defined on page 134) shall have occurred.

Expenses and Termination Fees Relating to the Merger (See page 134)

Generally, each party is required to pay all fees and expenses incurred by it in connection with the merger and the other transactions and agreements contemplated by the merger agreement. However, the merger agreement provides that, IHS will pay to Markit a termination fee in cash equal to $272,000,000 or that Markit will pay to IHS a termination fee in cash equal to $195,000,000 upon termination of the merger agreement under specified circumstances, including (i) a termination of the merger agreement as a result of a change in the recommendation of the board of directors of such party or (ii) a termination of the merger agreement by (1) either party if such party’s requisite stockholder or shareholder approval is not obtained, (2) the other party if there is an uncured breach of the merger agreement by such party such that the closing conditions would not be satisfied, or (3) either party if the merger is not consummated by the outside date and the requisite stockholder or shareholder approval of the other party has been obtained and, in each case set forth in this clause (ii), at the time of the relevant event giving rise to termination of the merger agreement there was an offer or proposal for an alternative transaction with respect to such party and such party enters into or consummates an alternative transaction within 12 months following such date of termination.

In addition, if either IHS or Markit terminates the merger agreement in the event the IHS required stockholder approval or the Markit required shareholder approvals are not obtained, the party whose stockholders or shareholders failed to provide the requisite approval is required to pay the other party’s expenses in an amount equal to $30,000,000. The expense reimbursement is credited against any termination fee payable as described above. The expenses and termination fee payments described above are subject to any adjustments that may be required in respect of VAT.

See the section entitled “The Merger Agreement—Description of the Merger Agreement—Expenses and Termination Fees” beginning on page 134 for a more complete discussion of the circumstances under which termination fees will be required to be paid.

Accounting Treatment (See page 116)

The merger will be accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations, which we refer to as ASC 805. Generally accepted accounting principles in the United States, which we refer to as U.S. GAAP, require that one of the two

 



 

12


Table of Contents

companies in the merger be designated as the acquirer for accounting purposes based on the evidence available. IHS will be treated as the acquiring entity for accounting purposes. In identifying IHS as the acquiring entity for accounting purposes, the companies took into account the voting rights of all equity instruments, the intended corporate governance structure of the combined company, and the size of each of the companies. In assessing the size of each of the companies, the companies evaluated various metrics, including, but not limited to: assets, revenue, operating income, EBITDA, adjusted EBITDA, market capitalization and enterprise value. No single factor was the sole determinant in the overall conclusion that IHS is the acquirer for accounting purposes, rather all factors were considered in arriving at such conclusion. Following completion of the transaction, IHS Markit will retain its status as a foreign private issuer, or FPI, until at least the end of fiscal 2017. However, even while IHS Markit continues to qualify as an FPI, it intends to report financial results in accordance with U.S. GAAP. In addition, Markit currently operates on a December 31 fiscal year end, while IHS operates on a November 30 fiscal year end. Following completion of the transaction, IHS Markit will operate on a November 30 fiscal year end.

No Appraisal Rights Available (See page 120)

Under the DGCL, no appraisal rights are available to IHS stockholders in connection with the merger.

Under the Bermuda Act, no appraisal rights are available to Markit common shareholders in connection with the merger.

Listing of Markit common shares; De-listing and Deregistration of IHS common stock (See page 120)

It is a condition to the completion of the merger that the Markit common shares to be issued to IHS stockholders in connection with the merger be approved for listing on the NASDAQ, subject to official notice of issuance. Additionally, at the effective time, the ticker symbol for Markit will be changed to a ticker symbol to be mutually agreed by Markit and IHS. When the merger is completed, the IHS common stock currently listed on the NYSE will cease to be quoted on the NYSE and will subsequently be deregistered under the Exchange Act.

Name Change (See page 140)

As of the effective time, Markit will file for registration to change the name of Markit from “Markit Ltd.” to “IHS Markit Ltd.” As described above, approval of the Markit name change requires the affirmative vote of majority of the votes cast, either in person or by proxy, at the Markit special meeting. It is a condition to the completion of the merger that the Markit shareholders approve the Markit name change. In addition, the implementation of the Markit name change is conditioned on the consummation of the merger.

Markit Amended Bye-laws (See page 138)

As of the effective time, Markit will amend and restate its bye-laws in the form of the Markit amended bye-laws, the form of which is attached to this joint proxy statement/prospectus as Annex B. As described above, approval of the Markit amended bye-laws requires the affirmative vote at the Markit special meeting of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date. It is a condition to the completion of the merger that the Markit shareholders approve the Markit amended bye-laws. In addition, the implementation of the Markit amended bye-laws is conditioned on the consummation of the merger.

Markit Foreign Private Issuer Status and Fiscal Year End (See page 141)

Markit currently qualifies as a foreign private issuer, or FPI, under the rules of the SEC. As a result, Markit qualifies for certain accommodations under the U.S. securities laws, including (i) being able to report its financial results in accordance with the International Financial Reporting Standards, which we refer to as IFRS, as adopted by the International Accounting Standards Board, which we refer to as the IASB, (ii) being subject to reduced

 



 

13


Table of Contents

disclosure requirements with respect to quarterly reporting and executive compensation, (iii) not being subject to the proxy rules under the Exchange Act, Section 16 under the Exchange Act or Regulation FD, and (iv) being able to follow certain home country rules in lieu of domestic company requirements under NASDAQ rules. Following completion of the transaction, IHS Markit will retain FPI status until at least the end of fiscal 2017. However, even while IHS Markit continues to qualify as an FPI, it will report its financial results in accordance with U.S. GAAP and it intends to elect to file its annual and interim reports on Forms 10-K, 10-Q and 8-K. Markit and IHS have not yet determined whether IHS Markit will avail itself of the other accommodations available to FPIs or whether IHS Markit will voluntarily comply with some or all of the requirements that would be applicable to domestic companies.

In addition, Markit currently operates on a December 31 fiscal year end, while IHS operates on a November 30 fiscal year end. Following completion of the transaction, IHS Markit will operate on a November 30 fiscal year end.

Litigation Relating to the Transaction (See page 120)

The merger agreement requires each party to promptly advise the other party of any litigation brought by any shareholder or stockholder of that party, as applicable, against such party or any of their respective directors relating to the merger agreement or any of the transactions contemplated thereby. Each party will give the other party the opportunity to participate in the defense or settlement of any such litigation by any stockholders or shareholders, and no such settlement will be agreed to without the other party’s prior written consent, which consent will not be unreasonably withheld or delayed. For a description of any current litigation related to the merger agreement and the merger, see “Litigation Relating to the Transaction” beginning on page 120 of this joint proxy statement/prospectus.

Comparison of Stockholder Rights (See page 171)

Upon completion of the merger, IHS stockholders will become shareholders of IHS Markit and their rights will be governed by Bermuda law and the governing corporate documents of IHS Markit in effect at the effective time, including the Markit amended bye-laws, the form of which is attached as Annex B hereto. IHS stockholders will have different rights once they become IHS Markit shareholders due to differences between the governing corporate documents of each of the entities and Markit shareholders will have different rights once the merger is completed due to differences between Markit’s current bye-laws and the Markit amended bye-laws. These differences are described in detail in the section entitled “Comparison of Rights of Markit Shareholders and IHS Stockholders” beginning on page 171.

Bermuda Company Considerations (See page 193)

Markit’s corporate affairs are governed by its memorandum of association and bye-laws and by the corporate law of Bermuda. Upon consummation of the merger, the rights of IHS Markit shareholders will be governed by the Markit memorandum of association, the Markit amended bye-laws and the corporate law of Bermuda. The provisions of the Bermuda Act, which applies to Markit, differ in certain material respects from laws generally applicable to U.S. companies incorporated in the State of Delaware, including IHS, and their stockholders. For additional information, see the section entitled “Bermuda Company Considerations” beginning on page 193.

The Special Meetings

The Markit Special Meeting (See page 44)

Date, Time and Place: The Markit special meeting will be held at Davis Polk & Wardwell, 5 Aldermanbury Square, London EC2V 7HR, England, on July 11, 2016, at 4:00 p.m., London time.

 



 

14


Table of Contents

Purpose: At the Markit special meeting, Markit shareholders will be asked:

 

    to consider and vote on the Markit share issuance proposal;

 

    to consider and vote on the Markit amended bye-laws proposal;

 

    to consider and vote on the Markit name change proposal; and

 

    to consider and vote on the Markit adjournment proposal (if necessary or appropriate).

Markit Record Date; Voting Rights:

Only holders of record of Markit common shares at the close of business on June 10, 2016, the record date for voting at the Markit special meeting, which we refer to as the Markit record date, are entitled to vote at the Markit special meeting. On May 31, 2016, 207,497,790 Markit common shares were issued and outstanding, including 25,219,470 common shares held by the EBT.

Vote Required. The votes required for each proposal are as follows:

Proposal 1: Markit share issuance proposal. Approval of this proposal requires the affirmative vote of Markit shareholders present, in person or represented by proxy, and entitled to vote at the Markit special meeting representing a majority of the votes actually cast on the Markit share issuance proposal.

Proposal 2: Markit amended bye-laws proposal. Approval of this proposal requires the affirmative vote at the Markit special meeting of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date.

Proposal 3: Markit name change proposal. Approval of this proposal requires the affirmative vote of Markit shareholders present, in person or represented by proxy, and entitled to vote at the Markit special meeting representing a majority of the votes actually cast on the Markit name change proposal.

Proposal 4: Markit adjournment proposal. Approval of this proposal requires the affirmative vote of a majority of the voting rights held by those shareholders present at the Markit special meeting, in person or by proxy.

Under the NASDAQ rules, if you hold your Markit common shares in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the Markit special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2, Proposal 3 or Proposal 4 at the Markit special meeting.

Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal 2 and Proposal 4 and will have no effect on Proposal 1 or Proposal 3 (assuming a quorum is present). However, because none of the proposals to be voted on at the Markit special meeting are routine matters for which brokers may have discretionary authority to vote, Markit does not expect any broker non-votes at the Markit special meeting.

As of the close of business on May 31, 2016, approximately 15.66% of the issued and outstanding Markit common shares were held by Markit’s directors and executive officers and their affiliates. We currently expect that Markit’s directors and executive officers will vote their Markit shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Completion of the merger is conditioned on approval of the Markit required shareholder proposals.

 



 

15


Table of Contents

The IHS Special Meeting (See page 50)

Date, Time and Place: The IHS special meeting will be held at IHS Corporate Headquarters, 15 Inverness Way East, Englewood, Colorado 80112, on July 11, 2016, at 9:00 a.m., Mountain Daylight Time.

Purpose: At the IHS special meeting, IHS stockholders will be asked:

 

    to consider and vote on the IHS merger proposal;

 

    to consider and vote on the IHS compensation proposal; and

 

    to consider and vote on the IHS adjournment proposal.

IHS Record Date; Voting Rights:

Only holders of record of IHS common stock at the close of business on June 10, 2016, the record date for voting at the IHS special meeting, which we refer to as the IHS record date, are entitled to vote at the IHS special meeting. On the IHS record date, 67,452,437 shares of IHS common stock will be entitled to vote.

You may cast one vote for each share of IHS common stock that you owned as of the close of business on the IHS record date.

Votes Required. The votes required for each proposal are as follows:

Proposal 1: IHS merger proposal. The votes cast “FOR” this proposal must represent a majority of all outstanding shares of IHS common stock entitled to vote.

Proposal 2: IHS compensation proposal. The affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter is required to approve the IHS compensation proposal.

Proposal 3: IHS adjournment proposal. The affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter is required to approve the IHS adjournment proposal.

Under the NYSE rules, if you hold your shares of IHS common stock in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the IHS special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2 or Proposal 3 at the IHS special meeting.

Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal 1 and will have no effect on Proposal 2 and Proposal 3 (assuming a quorum is present). However, because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting.

As of the close of business on May 31, 2016, 1% of the outstanding shares of IHS common stock were held by IHS’s directors and executive officers and their affiliates. We currently expect that IHS’s directors and executive officers will vote their IHS shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Completion of the merger is conditioned on approval of the IHS merger proposal.

 



 

16


Table of Contents

Selected Historical Financial Data of Markit

The following table sets forth selected historical consolidated financial information for Markit, which is reported in accordance with IFRS as adopted by the IASB. The historical consolidated financial information for each of the fiscal years in the three-year period ended December 31, 2015 and the selected historical consolidated balance sheet data as of December 31, 2015 and December 31, 2014 have been derived from the audited consolidated financial statements of Markit as of and for the fiscal year ended December 31, 2015, contained in its annual report on Form 20-F filed with the SEC on March 11, 2016, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial information for each of the fiscal years ended December 31, 2012 and December 31, 2011 and the selected balance sheet data as of December 31, 2013, December 31, 2012, and December 31, 2011 have been derived from Markit’s audited consolidated financial statements as of and for such years contained in Markit’s other filings with the SEC, which are not incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with Markit’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 201. Markit’s historical consolidated financial information may not be indicative of the future performance of Markit or the combined company. All results of operations presented are continuing operations. No dividends have been declared in the periods presented.

 

    As of and for the year ended December 31,  
    2015     2014     2013     2012     2011  
    ($ in millions other than share and per share data)  

Income statement data:

         

Revenue

  $ 1,113.4      $ 1,065.1      $ 947.9      $ 860.6      $ 762.5   

Operating profit

    252.3        243.4        230.1        224.7        229.7   

Profit for the period

    152.1        164.1        147.0        153.1        156.2   

Profit attributable to equity holders

    152.5        165.2        139.4        125.0        125.8   

Earnings per share—basic

  $ 0.85      $ 0.92      $ 0.80      $ 0.70      $ 0.70   

Earnings per share—diluted

  $ 0.80      $ 0.90      $ 0.79      $ 0.69      $ 0.69   

Weighted average number of shares issued and outstanding—basic

    179,797,425        179,183,880        173,875,980        177,716,240        178,929,210   

Weighted average number of shares issued and outstanding—diluted

    189,796,719        184,467,540        175,550,760        180,020,120        181,730,830   

Balance sheet data:

         

Total assets

  $ 3,568.3      $ 3,300.0      $ 3,096.7      $ 3,151.3      $ 2,648.3   

Total equity / net assets

    2,112.5        2,270.6        2,055.9        1,929.7        2,031.4   

Share capital

    1.7        1.8        0.2        0.2        0.2   

 



 

17


Table of Contents

The following table sets forth selected historical consolidated financial information and selected balance sheet data for Markit for the three months ended March 31, 2016, derived from the unaudited consolidated financial statements of Markit contained in Exhibit 99.1 of its Current Report on Form 6-K furnished to the SEC on May 10, 2016 (second report on such day), which is incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with Markit’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 201. Markit’s historical consolidated financial information may not be indicative of the future performance of Markit or IHS Markit.

 

     Three Months
Ended
March 31,
2016
 
    

(in millions,
except for

per share
amounts)

 

Statement of Operations Data:

  

Revenue

   $ 287.8   

Profit for the period

   $ 24.7   

Basic earnings per share

   $ 0.14   

Diluted earnings per share

   $ 0.13   

Balance Sheet Data (as of period end):

  

Cash and cash equivalents

   $ 89.7   

Total assets

   $ 3,501.9   

Total long-term debt and capital leases

   $ 656.6   

Total stockholders’ equity/net assets

   $       2,200.7   

 



 

18


Table of Contents

Selected Historical Financial Data of IHS

The following table sets forth selected historical consolidated financial information for IHS, which is reported in accordance with U.S. GAAP. The historical consolidated financial information for each of the years in the three-year period ended November 30, 2015 and the selected historical consolidated balance sheet data as of November 30, 2015 and November 30, 2014 have been derived from the audited consolidated financial statements of IHS as of and for the fiscal year ended November 30, 2015, contained in its annual report on Form 10-K filed with the SEC on January 15, 2016, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial information for each of the years ended November 30, 2012 and November 30, 2011 and the selected balance sheet data as of November 30, 2013, November 30, 2012, and November 30, 2011 have been derived from IHS’s audited consolidated financial statements as of and for such years contained in IHS’s other reports filed with the SEC, as adjusted as described herein, which are not incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with IHS’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 201. IHS’s historical consolidated financial information may not be indicative of the future performance of IHS or IHS Markit. No dividends have been declared in the periods presented.

 

     Years Ended November 30,  
     2015      2014      2013      2012(1)      2011(1)  
     ($ in millions, except for per share amounts)  

Statement of Operations Data:

              

Revenue

   $ 2,184.3       $ 2,079.8       $ 1,692.0       $ 1,403.7       $ 1,223.6   

Income from continuing operations

   $ 188.9       $ 178.0       $ 116.5       $ 143.4       $ 125.5   

Income from discontinued operations

     51.3         16.6         15.2         14.8         9.9   

Net income

   $ 240.2       $ 194.5       $ 131.7       $ 158.2       $ 135.4   

Basic earnings per share:

              

Income from continuing operations

   $ 2.76       $ 2.61       $ 1.75       $ 2.18       $ 1.93   

Income from discontinued operations

     0.75         0.24         0.23         0.22         0.15   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 3.51       $ 2.85       $ 1.98       $ 2.40       $ 2.09   

Diluted earnings per share:

              

Income from continuing operations

   $ 2.73       $ 2.57       $ 1.73       $ 2.15       $ 1.91   

Income from discontinued operations

     0.74         0.24         0.23         0.22         0.15   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 3.47       $ 2.81       $ 1.95       $ 2.37       $ 2.06   

Balance Sheet Data (as of period end):

              

Cash and cash equivalents

   $ 291.6       $ 153.2       $ 258.4       $ 345.0       $ 234.7   

Total assets

     5,601.1         5,272.1         5,359.6         3,549.2         3,073.0   

Total long-term debt

     2,095.2         1,806.1         1,779.1         890.9         658.9   

Total stockholders’ equity/net assets

     2,200.9         2,159.5         1,907.0         1,584.4         1,384.7   

 

(1) Statement of Operations Data has been adjusted for reclassification for discontinued operations.

 



 

19


Table of Contents

The following table sets forth selected historical consolidated financial information and selected balance sheet data for IHS for the three months ended February 29, 2016, derived from the unaudited consolidated financial statements of IHS contained in its quarterly report on Form 10-Q filed with the SEC on March 21, 2016, which is incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with IHS’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 201. IHS’s historical consolidated financial information may not be indicative of the future performance of IHS or IHS Markit.

 

     Three Months
Ended
February 29,
 
     2016  
    

(in millions, except
for per

share amounts)

 

Statement of Operations Data:

  

Revenue

   $ 548.4   

Income from continuing operations

   $ 41.2   

Income from discontinued operations

     3.8   

Net income

   $ 45.0   

Basic earnings per share:

  

Income from continuing operations

   $ 0.61   

Income from discontinued operations

     0.06   

Net income

   $ 0.67   

Diluted earnings per share:

  

Income from continuing operations

   $ 0.61   

Income from discontinued operations

     0.06   

Net income

   $ 0.66   

Balance Sheet Data (as of period end):

  

Cash and cash equivalents

   $ 60.5   

Total assets

   $ 6,562.4   

Total long-term debt

   $ 2,410.0   

Total stockholders’ equity/net assets

   $ 2,139.2   

Summary Unaudited Pro Forma Condensed Combined Financial Information

The following table shows summary unaudited pro forma condensed combined financial information, which we refer to as the summary pro forma financial information, about the financial condition and results of operations of the combined company, after giving effect to the merger, which were prepared using the acquisition method of accounting with IHS designated as the accounting acquirer of Markit. See “The Merger Agreement—Accounting Treatment” beginning on page 116 and see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 149 for more information.

The summary pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the beginning of the period presented, nor are they necessarily indicative of the future operating results or financial position of the combined company. In addition, the summary pro forma financial information includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes to the information presented. The summary pro forma financial information does not include estimated cost or growth synergies, adjustments related to restructuring or integration activities, future acquisitions or disposals not yet known or probable, including those that may be required by regulatory or governmental authorities in connection with the merger, or impacts of merger related change in control provisions that are currently not factually supportable and/or probable of occurring.

 



 

20


Table of Contents

The summary pro forma financial information has been derived from and should be read in conjunction with the consolidated financial statements and the related notes of both Markit and IHS, as filed with their respective Annual Reports on Form 20-F and 10-K, respectively, for the fiscal year ended December 31, 2015 and the fiscal year ended November 30, 2015, respectively, and IHS’s Quarterly Report on Form 10-Q for the period ended February 29, 2016 and Markit’s Current Report on Form 6-K dated May 10, 2016 (second report on such day), Exhibit 99.1 of which contains its unaudited consolidated interim financial statements as of and for the three months ended March 31, 2016, which are incorporated by reference in this joint proxy statement/prospectus, and the more detailed unaudited pro forma condensed combined financial information, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201 and see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 149.

 

     For the year ended
November 30, 2015
    For the three months ended
February 29, 2016
 
     ($ in millions)  

Income Statement Data

    

Revenue

   $ 3,297.7      $ 836.2   
  

 

 

   

 

 

 

Operating expenses:

    

Cost of revenue

     1,360.4        360.2   

Selling, general and administrative

     962.2        232.5   

Depreciation and amortization

     420.8        111.3   

Restructuring charges

     39.4        5.7   

Acquisition-related costs

     5.5        4.8   

Net periodic pension and postretirement expense

     4.5        0.4   

Litigation related charges

     48.7        0.8   

Other expense (income), net

     (12.1     0.3   
  

 

 

   

 

 

 

Total operating expenses

     2,829.4        716.0   
  

 

 

   

 

 

 

Operating income

     468.3        120.2   
  

 

 

   

 

 

 

Interest income

     1.0        0.2   

Interest expense

     (87.6     (36.1
  

 

 

   

 

 

 

Non-operating expense, net

     (86.6     (35.9

Equity in earnings of equity method investee

     (11.3     (2.4
  

 

 

   

 

 

 

Income from continuing operations before income taxes

     370.4        81.9   

Provision for income taxes

     (89.0     (19.3
  

 

 

   

 

 

 

Income from continuing operations

   $ 281.4      $ 62.6   
  

 

 

   

 

 

 

Net loss attributable to noncontrolling interests

     (0.4     (0.2
  

 

 

   

 

 

 

Income from continuing operations attributable to IHS Markit stockholders

   $ 281.8      $ 62.8   
  

 

 

   

 

 

 

 



 

21


Table of Contents
     As of February 29, 2016  
     ($ in millions)  

Balance Sheet Data

  

Cash and cash equivalents

   $ 75.5   

Accounts receivable, net

     588.7   

Assets held for sale

     201.6   

Other current assets

     241.1   

Property and equipment, net

     365.7   

Intangible assets, net

     4,410.1   

Goodwill

     9,343.9   

Other non-current assets

     48.3   
  

 

 

 

Total assets

     15,274.9   
  

 

 

 

Short-term debt

     674.6   

Accounts payable

     60.2   

Deferred revenue

     887.1   

Liabilities held for sale

     42.0   

Other current liabilities

     406.7   

Long-term debt

     3,066.6   

Deferred income taxes

     1,058.2   

Other non-current liabilities

     150.1   
  

 

 

 

Total liabilities

     6,345.5   
  

 

 

 

Redeemable noncontrolling interest

     77.0   
  

 

 

 

Total stockholders’ equity

     8,852.4   
  

 

 

 

Reconciliation from the Net Income (Profit) to the Adjusted EBITDA under U.S. GAAP

Markit Adjusted EBITDA and Adjusted EBITDA Margin are measures used by Markit’s management and chief operating decision maker to analyze the primary financial performance. Adjusted EBITDA is defined as Markit’s net income under U.S. GAAP, adjusted to exclude certain items, including but not limited to income taxes, non-operating expense (net), depreciation and amortization on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related costs, litigation related charges, share based compensation and related items, other income or expense (net), including Adjusted EBITDA attributable to joint ventures and excluding Adjusted EBITDA attributable to noncontrolling interests. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue, excluding revenue attributable to noncontrolling interests. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as an analytical tool. Adjusted EBITDA is not a presentation made in accordance with U.S. GAAP, is not a measure of financial condition or liquidity and should not be considered as an alternative to operating income for the periods determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. The determination of Adjusted EBITDA and Adjusted EBITDA Margin contains a number of estimates and assumptions that may prove to be incorrect and differ materially from actual results. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow, as it does not take into account certain items such as interest and principal payments on our indebtedness, working capital needs, tax payments, and capital expenditures. We believe that the inclusion of Adjusted EBITDA and Adjusted EBITDA Margin in this prospectus is appropriate to provide additional information to investors about our operating performance and to provide a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Companies also present Adjusted EBITDA, Adjusted EBITDA Margin and other pro forma measures of Adjusted EBITDA because investors, analysts and rating agencies consider these measures useful. Because not all companies calculate Adjusted EBITDA and Adjusted EBITDA Margin identically, this presentation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to the similarly titled measures of other companies. The following tables reconcile Markit’s net income to Markit’s

 



 

22


Table of Contents

Adjusted EBITDA for the year ended December 31, 2015 and the combined company’s pro forma income from continuing operations to the combined company’s pro forma Adjusted EBITDA for the year ended November 30, 2015 and the three months ended February 29, 2016:

 

     For the year ended
December 31, 2015
 
     (in $ millions)  

Net income

   $ 128.7   

Income tax expense

     55.1   

Non-operating expense, net (Finance costs—net)

     16.6   

Depreciation and amortization

     214.4   

Acquisition related costs

     4.1   

Litigation related charges

     48.7   

Share based compensation and related items

     31.6   

Other (income)/expense, net

     (13.7

Share of results from joint venture not attributable to EBITDA

     (2.7

Adjusted EBITDA attributable to non-controlling interests

     (2.1

Adjusted EBITDA

   $ 480.7   
  

 

 

 

Adjusted EBITDA Margin

     43.5 % 

 

     Pro Forma
for the year ended
November 30, 2015
    Pro Forma for the
three months ended
February 29, 2016
 

Income from continuing operations

     281.4        62.6   

Interest income

     (1.0     (0.2

Interest expense

     87.6        36.1   

Provision for income taxes

     89.0        19.3   

Depreciation

     180.9        48.0   

Amortization related to acquired intangible assets

     239.9        63.3   

Litigation related charges

     48.7        0.8   

Share of results from JV not attributable to Adjusted EBITDA

     (2.7     (0.6

Adjusted EBITDA attributable to non-controlling interests

     (2.1     (0.6

Stock-based compensation expense

     220.3        60.0   

Restructuring charges

     39.4        5.7   

Acquisition-related costs

     5.5        4.8   

Impairment of assets

     1.3        —     

Pension mark-to-market and settlement expense

     2.6        —     
  

 

 

   

 

 

 

Adjusted EBITDA

     1,190.8        299.2   
  

 

 

   

 

 

 

Reconciliation of stand-alone reported Adjusted EBITDA to Combined Pro Forma Adjusted EBITDA

    

Markit reported Adjusted EBITDA prepared under IFRS

     496.9        123.7   

IHS reported Adjusted EBITDA prepared under US GAAP

     696.4        179.6   
  

 

 

   

 

 

 

Total combined Adjusted EBITDA

     1,193.3        303.3   

Markit software capitalisation IFRS to US GAAP adjustment

     (16.2     (5.0

Markit other (gains)/losses net presentation adjustment(1)

     13.7        0.9   
  

 

 

   

 

 

 

Adjusted EBITDA

     1,190.8        299.2   
  

 

 

   

 

 

 

 

(1) Other (gains)/losses—net, were previously excluded from Markit’s definition of Adjusted EBITDA. Under the definition of Adjusted EBITDA of IHS Markit, this item will no longer be excluded.

 



 

23


Table of Contents

Reconciliation from the Net Income (Profit) to the Adjusted Earnings under U.S. GAAP

Markit Adjusted Earnings and Adjusted Diluted EPS are measures used by Markit’s management and chief operating decision maker to analyze the primary financial performance. Adjusted Earnings is defined as Markit’s net income under U.S. GAAP, adjusted to exclude certain items, including but not limited to amortization on acquisition related intangible assets, acquisition related costs, litigation related charges, share based compensation and related items, other income or expense (net), unwind of discount, less the tax effect of these adjustments and excluding Adjusted Earnings attributable to noncontrolling interests. Adjusted diluted EPS is defined as Adjusted Earnings divided by the weighted number of common shares issued and outstanding, diluted. Adjusted Earnings and Adjusted Diluted EPS have limitations as an analytical tool. Adjusted Earnings is not a presentation made in accordance with U.S. GAAP, is not a measure of financial condition or liquidity and should not be considered as an alternative to operating income for the periods determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. The determination of Adjusted Earnings and Adjusted Diluted EPS contains a number of estimates and assumptions that may prove to be incorrect and differ materially from actual results. Additionally, Adjusted Earnings is not intended to be a measure of free cash flow, as it does not take into account certain items such as interest and principal payments on our indebtedness, working capital needs, tax payments, and capital expenditures. We believe that the inclusion of Adjusted Earnings and Adjusted Diluted EPS in this prospectus is appropriate to provide additional information to investors about our operating performance and to provide a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies. Companies also present Adjusted Earnings and Adjusted Diluted EPS and other pro forma measures of Adjusted Earnings because investors, analysts and rating agencies consider these measures useful. Because not all companies calculate Adjusted Earnings and Adjusted Diluted EPS identically, this presentation of Adjusted Earnings and Adjusted Diluted EPS may not be comparable to the similarly titled measures of other companies. The following table reconciles Markit’s net income to Markit’s Adjusted Earnings for the year ended December 31, 2015:

 

     For the year ended
December 31, 2015
 
     (in $ millions)  

Net income

   $ 128.7   

Amortization—acquisition related

     118.4   

Acquisition related costs

     4.1   

Litigation related charges

     48.7   

Share based compensation and related items

     31.6   

Other (income)/expense, net

     (13.7

Unwind of discount

     6.9   

Tax effect of above adjustments

     (52.6

Adjusted earnings attributable to non-controlling interests

     (2.4
  

 

 

 

Adjusted earnings

   $ 269.7   
  

 

 

 

Adjusted diluted EPS

   $ 1.43   
  

 

 

 

 



 

24


Table of Contents

Equivalent and Comparative Per Share Information

The following table sets forth selected per share information for Markit common shares on a historical basis for the fiscal year ended December 31, 2015, selected per share information for IHS common stock on a historical basis for the fiscal year ended November 30, 2015, selected per share information for the combined company shares on a pro forma combined basis for the fiscal year ended November 30, 2015 and selected per share information for IHS common stock on a pro forma equivalent basis for the fiscal year ended November 30, 2015. The per share information reflects the Markit common shares and IHS common stock issued and outstanding (excluding any shares that are held in either treasury or the Markit EBT). The historical information of each of Markit and IHS as of and for the fiscal year ended December 31, 2015 and the fiscal year ended November 30, 2015, respectively, is audited and the historical book value per share information was derived from those audited historical financial statements; other information in the table is unaudited.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the beginning of the period presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. You should read the data with the historical consolidated financial statements and related notes of Markit and IHS contained in their respective Annual Reports on Form 20-F and Form 10-K, respectively, for the fiscal year ended December 31, 2015 and the fiscal year ended November 30, 2015, respectively, each of which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

IHS Markit’s pro forma combined earnings per share was calculated in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 149. IHS’s pro forma equivalent per share amounts were calculated by multiplying IHS Markit pro forma combined per share amounts by the exchange ratio.

 

     As of or for the
Fiscal Year Ended
December 31, 2015
     As of or for the
Three Months Ended
March 31, 2016
 

Markit—Historical:

     

Book value per share

   $ 11.74       $ 12.02   

Cash dividends per share

     N/A         N/A   

Earnings per common share—diluted

   $ 0.80       $ 0.13   

Earnings per common share—basic

   $ 0.85       $ 0.14   
     As of or for the
Fiscal Year Ended
November 30, 2015
     As of or for the
Fiscal Quarter Ended
February 29, 2016
 

IHS—Historical:

     

Book value per share

   $ 32.59       $ 31.73   

Cash dividends per share

     N/A         N/A   

Earnings per share of common stock—diluted

   $ 3.47       $ 0.66   

Earnings per share of common stock—basic

   $ 3.51       $ 0.67   
     As of or for the
Fiscal Year Ended
November 30, 2015
     As of or for the
Three Months Ended
February 29, 2016
 

IHS Markit—Pro forma:

     

Book value per share

   $ 20.95       $ 21.08   

Cash dividends per share(1)

     N/A         N/A   

Earnings from continuing operations per common share—diluted

   $ 0.64       $ 0.14   

Earnings from continuing operations per common share—basic

   $ 0.67       $ 0.15   

 

(1) Pro forma cash dividends per share is not presented as the dividend policy for the combined company will be determined by the IHS Markit board following completion of the combination.

 



 

25


Table of Contents
     As of or for
the Fiscal
Year Ended
November 30,
2015
 

IHS Pro forma—Equivalents

  

Book value per share

   $ 71.17   

Cash dividends per share(1)

     N/A   

Diluted earnings per share attributable to IHS stockholders from continuing operations

   $ 2.31   

Basic earnings per share attributable to IHS stockholders from continuing operations

   $ 2.38   

 

(1) Pro forma cash dividends per share is not presented as the dividend policy for the combined company will be determined by the IHS Markit board following completion of the combination.

 



 

26


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed merger and the anticipated benefits thereof. These and other forward-looking statements, including the failure to consummate the proposed merger or to make or take any filing or other action required to consummate such transaction on a timely matter or at all, are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Important risk factors that may cause such a difference include, but are not limited to, (i) the completion of the proposed merger on anticipated terms and timing, including obtaining shareholder or stockholder (as applicable) approval, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the combined company’s operations and other conditions to the completion of the merger, (ii) the ability of IHS and Markit to integrate their businesses successfully and to achieve anticipated synergies, (iii) potential litigation relating to the proposed merger on that could be instituted against IHS, Markit or their respective directors, (iv) the risk that disruptions from the proposed merger will harm IHS’s and Markit’s business, including current plans and operations, (v) the ability of IHS or Markit to retain and hire key personnel, (vi) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger, (vii) continued availability of capital and financing and rating agency actions, (viii) legislative, regulatory and economic developments, including any new or proposed U.S. Treasury rule changes, (ix) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect IHS’s and/or Markit’s financial performance, (x) certain restrictions during the pendency of the merger that may impact IHS’s or Markit’s ability to pursue certain business opportunities or strategic transactions and (xi) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. Unlisted risks and uncertainties may present significant additional obstacles to the realization of forward looking statements. Such risks and other factors that may impact management’s assumptions are more particularly described in IHS’s and Markit’s filings with the SEC, including under the caption “Cautionary Statement Regarding Forward-Looking Statements” with respect to Markit and “Cautionary Note Regarding Forward-Looking Statements” with respect to IHS, and “Risk Factors” in Markit’s and IHS’s Annual Reports on Forms 20-F and 10-K respectively for the fiscal year ended December 31, 2015 in the case of Markit and the fiscal year ended November 30, 2015 in the case of IHS. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on IHS’s or Markit’s consolidated financial condition, results of operations, credit rating or liquidity. The information contained herein speaks as of the date hereof. Neither IHS nor Markit assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

 

27


Table of Contents

RISK FACTORS

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27, you should carefully consider the following risks before deciding whether to vote for the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal, in the case of Markit shareholders, or for the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal, in the case of IHS stockholders. In addition, you should read and consider the risks associated with each of the businesses of Markit and IHS because these risks will also affect IHS Markit after the consummation of the merger. Descriptions of some of these risks can be found in Markit’s and IHS’s Annual Report on Form 20-F and Form 10-K for the fiscal year ended December 31, 2015 and the fiscal year ended November 30, 2015, respectively, each of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 201.

Risks Related to the Merger

IHS Stockholders Cannot Be Sure of the Value of the Merger Consideration They Will Receive.

IHS stockholders will receive a fixed number of Markit common shares in the merger, rather than a number of Markit common shares with a particular fixed market value. The market value of Markit common shares at the effective time may vary significantly from their prices on the date prior to the date the merger agreement was executed, the date of this joint proxy statement/prospectus or the date on which IHS stockholders vote on the IHS merger proposal. Because the exchange ratio is fixed and will not be adjusted to reflect any changes in the market prices of Markit common shares, the market value of the Markit common shares issued in the merger, and the IHS common stock surrendered in the merger, may be higher or lower than the values of these shares on earlier dates. All of the merger consideration to be received by IHS stockholders will be Markit common shares (other than cash in lieu of fractional shares, based on then prevailing market prices, received by IHS stockholders). At the time of the special meetings, IHS stockholders will not know or be able to determine the value of the Markit common shares they may receive upon completion of the merger. Changes in the market prices of Markit common shares may result from a variety of factors that are beyond the control of Markit, including changes in its business, operations and prospects, regulatory considerations, governmental actions, and legal proceedings and other developments. Market assessments of the benefits of the merger, the likelihood that the merger will be completed and general and industry-specific market and economic conditions may also have an effect on the market price of Markit common shares. Changes in market prices of Markit common shares may also be caused by fluctuations and developments affecting industry-specific and general economic and market conditions and may have an adverse effect on Markit common shares prior to the consummation of the merger.

Neither IHS nor Markit is permitted to terminate the merger agreement solely because of changes in the market prices of Markit common shares. In addition, the market value of Markit common shares may vary significantly from the date of the special meetings to the date of the completion of the merger. You are urged to obtain up-to-date prices for Markit common shares. There is no assurance that the merger will be completed, that there will not be a delay in the completion of the merger, or that all or any of the anticipated benefits of the merger will be obtained. See “Comparative Stock Prices” for ranges of historic prices of IHS common stock and Markit common shares.

The Market Price for the Combined Company Common Shares May Be Affected by Factors Different from Those that Historically Have Affected IHS Common Stock and Markit Common Shares.

Upon completion of the merger, holders of shares of IHS common stock (other than any shares held in treasury) will become holders of Markit common shares. IHS and Markit each have businesses that differ from

 

28


Table of Contents

each other. Accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently affecting the results of operations of each of Markit and IHS. For a discussion of the businesses of IHS and Markit and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” in this joint proxy statement/prospectus.

IHS or Markit May Waive One or More of the Closing Conditions Without Re-soliciting Stockholder Approval.

IHS or Markit may determine to waive, in whole or in part, one or more of the conditions to its obligations to consummate the merger. IHS or Markit currently expect to evaluate the materiality of any waiver and its effect on IHS stockholders or Markit shareholders, as applicable, in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies or voting cards is required in light of such waiver. Any determination whether to waive any condition to the merger or as to re-soliciting stockholder approval or amending this joint proxy statement/prospectus as a result of a waiver will be made by IHS or Markit, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

The Merger Agreement May Be Terminated in Accordance with Its Terms and the Merger May Not Be Completed.

The completion of the merger is subject to the satisfaction or waiver of a number of conditions. Those conditions include: (i) the approval of the IHS merger proposal by the IHS stockholders and the approval of the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal by the Markit shareholders; (ii) the receipt of certain domestic and foreign regulatory approvals under competition laws, including the termination or expiration of the waiting period under the HSR Act; (iii) the absence of certain governmental restraints or prohibitions preventing completion of the merger or imposing a regulatory material adverse effect; (iv) the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of any stop order or proceedings by the SEC; (v) the approval of the Markit common shares to be issued to IHS stockholders for listing on the NASDAQ; (vi) the truth and correctness of the representations and warranties made by both parties (generally subject to certain “materiality” and “material adverse effect” qualifiers); and (vii) the performance by IHS and Markit of their respective obligations under the merger agreement in all material respects.

These conditions to the closing may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by November 30, 2016 (subject to extension to February 28, 2017, by either party if certain antitrust-related conditions to the closing have not been satisfied), either IHS or Markit may choose not to proceed with the merger, and the parties can mutually decide to terminate the merger agreement at any time prior to the consummation of the merger, before or after the required IHS and Markit shareholder approvals. In addition, IHS or Markit may elect to terminate the merger agreement in certain other circumstances. If the merger agreement is terminated, Markit and IHS may incur substantial fees in connection with termination of the merger agreement and will not recognize the anticipated benefits of the merger. See “The Merger Agreement—Description of the Merger Agreement—Termination of the Merger Agreement.”

Termination of the Merger Agreement Could Negatively Impact IHS and/or Markit.

If the merger agreement is terminated in accordance with its terms and the merger is not consummated, the ongoing businesses of IHS and Markit may be adversely affected by a variety of factors. IHS’s and Markit’s respective businesses may be adversely impacted by the failure to pursue other beneficial opportunities during the pendency of the merger, by the failure to obtain the anticipated benefits of completing the merger, by payment of certain costs relating to the merger, and by the focus of their respective managements on the merger for an extended period of time rather than on management opportunities or other issues. The market price of IHS common stock and/or Markit common shares might decline as a result of any such failures to the extent that the current market prices reflect a market assumption that the merger will be completed.

 

29


Table of Contents

In addition, if the merger agreement is terminated under certain circumstances, IHS may be required to pay Markit a termination fee of $272,000,000 in cash or to pay Markit’s expenses in the amount of $30,000,000 in cash or Markit may be required to pay IHS a termination fee of $195,000,000 in cash or to pay IHS’s expenses in the amount of $30,000,000 in cash, depending on the circumstances surrounding the termination (and in each case subject to any adjustments that may be required in respect of VAT). See “The Merger Agreement—Description of the Merger Agreement—Expenses and Termination Fees.” IHS or Markit may also be negatively impacted if the merger agreement is terminated and their respective boards seek but are unable to find another business combination or strategic transaction offering equivalent or more attractive benefits than the benefits expected to be provided in the merger, or if the respective companies become subject to litigation related to entering into or failing to consummate the merger, including direct actions by IHS stockholders or Markit shareholders, as applicable, against the directors and/or officers of IHS or Markit for breaches of fiduciary duty and derivative actions brought by IHS stockholders or Markit shareholders in the name of the respective companies.

IHS and Markit Will Be Subject to Business Uncertainties While the Merger is Pending.

Uncertainty about the completion or effect of the merger may affect the relationship between Markit and IHS and their respective suppliers, customers, distributors, licensors and licensees and may have an adverse effect on IHS and/or Markit, and consequently on the combined company. These uncertainties may cause suppliers, customers, distributors, licensors and others that deal with the parties to seek to change existing business relationships with them and to delay or defer decisions concerning Markit or IHS. Changes to existing business relationships, including termination or modification, could negatively affect each of IHS’s and Markit’s revenues, earnings and cash flow, as well as the market price of its common stock.

In addition, each of IHS and Markit is dependent on the experience and industry knowledge of their respective officers, key management personnel and other key employees to operate their businesses and execute their respective business plans. The combined company’s success after the merger will depend in part upon the ability of IHS and Markit to retain key management personnel and other key employees and to attract new management personnel and other key employees. Current and prospective employees of IHS and Markit may experience uncertainty about their roles within the combined company following the merger, which may have an adverse effect on the ability of each of IHS and Markit to attract or retain key management personnel and other key employees. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the businesses, the combined company’s business following the consummation of the merger could be negatively impacted. Accordingly, no assurance can be given that the combined company will be able to attract or retain key management personnel and other key employees of IHS and Markit to the same extent that IHS and Markit have previously been able to attract or retain their employees. Adverse effects arising from the pendency of the merger could be exacerbated by any delays in consummation of the merger or termination of the merger agreement.

IHS and Markit Will Be Subject to Certain Contractual Restrictions While the Merger is Pending.

The merger agreement restricts each of IHS and Markit from making certain acquisitions and divestitures, entering into certain contracts, incurring certain indebtedness and expenditures, repurchasing or issuing securities outside of existing equity award programs (and, in the case of Markit, outside of Markit’s existing accelerated share repurchase program), and taking other specified actions until the earlier of the completion of the merger or the termination of the merger agreement without the consent of the other party. These restrictions may prevent IHS and/or Markit from pursuing attractive business opportunities that may arise prior to the completion of the merger and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from the pendency of the merger could be exacerbated by any delays in consummation of the merger or the termination of the merger agreement. See “The Merger Agreement—Description of the Merger Agreement—Conduct of Business” beginning on page 125.

 

30


Table of Contents

Third Parties May Terminate or Alter Existing Contracts or Relationships with IHS or Markit.

Each of IHS and Markit has contracts with customers, suppliers, vendors, distributors, landlords, licensors, joint venture partners, and other business partners which may require IHS or Markit, as applicable, to obtain consent from these other parties in connection with the merger. If these consents cannot be obtained, the counterparties to these contracts and other third parties with which IHS and/or Markit currently have relationships may have the ability to terminate, reduce the scope of or otherwise materially adversely alter their relationships with either or both parties in anticipation of the merger, or with the combined company following the merger. The pursuit of such rights may result in IHS, Markit or the combined company suffering a loss of potential future revenue or incurring liabilities in connection with a breach of such agreements and losing rights that are material to its business. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the merger. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the merger or the termination of the merger agreement.

IHS and Markit Will Incur Significant Transaction Costs in Connection with the Merger.

IHS and Markit have incurred and expect to incur a number of non-recurring costs associated with the merger. These costs and expenses include financial advisory, legal, accounting, consulting and other advisory fees and expenses, reorganization and restructuring costs, severance/employee benefit-related expenses, public company filing fees and other regulatory expenses, printing expenses and other related charges. Some of these costs are payable by IHS and Markit regardless of whether the merger is completed.

IHS Directors and Executive Officers May Have Interests in the Merger Different from the Interests of IHS Stockholders Generally and Markit Directors and Executive Officers May Have Interests in the Merger Different from the Interests of Markit Shareholders Generally.

Certain of the directors and executive officers of each of IHS and Markit negotiated the terms of the merger agreement, the IHS board recommended that IHS stockholders vote in favor of the IHS merger proposal, the IHS compensation proposal, and the IHS adjournment proposal and the Markit board recommended that Markit shareholders vote in favor of the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal. These directors and executive officers may have interests in the merger, which are different from, or in addition to, or in conflict with, those of IHS stockholders and Markit shareholders, generally. These interests include the continued employment of certain executive officers of IHS and Markit by the combined company, the continued service of certain independent directors and executive directors of IHS and Markit as directors of IHS Markit, the treatment in (or in connection with) the merger of equity awards as well as certain change-in-control severance payments and benefits, transition or retention awards, or other rights held by IHS directors and executive officers or Markit directors and executive officers, as applicable, and the indemnification of former IHS and Markit directors and officers by the combined company.

IHS stockholders and Markit shareholders should be aware of these interests when they consider recommendations of the respective IHS and Markit boards that they vote in favor of the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal, or the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change and the Markit adjournment proposal, as applicable. The IHS board was aware of these interests when it determined that the merger agreement and the transactions contemplated thereby were advisable and fair to and in the best interests of the IHS stockholders and recommended that the IHS stockholders adopt the merger agreement. The interests of IHS directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Interests of IHS Directors and Executive Officers in the Merger.” Likewise, the Markit board was aware of these interests when it determined that the merger agreement and the transactions contemplated thereby were advisable and fair to and in the best interests of the Markit shareholders and recommended that the Markit shareholders approve the Markit share issuance, the Markit amended bye-laws and

 

31


Table of Contents

the Markit name change. The interests of Markit directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “The Merger Agreement—Interests of Markit Directors and Executive Officers in the Merger.”

Existing IHS Stockholders and Markit Shareholders Will Have a Reduced Ownership and Voting Interest in, and Will Exercise Less Influence Over Management of, the Combined Company After the Merger Than They Did With Respect to IHS and Markit Prior to the Merger.

IHS stockholders and Markit shareholders currently have the right to vote in the election of the IHS board and the Markit board, respectively, and on other matters affecting the respective companies. Upon the completion of the merger, each IHS stockholder who receives Markit common shares in the merger will become a stockholder of the combined company with a percentage ownership of, and voting interest in, the combined company that is smaller than such stockholder’s percentage ownership of, and voting interest in IHS immediately prior to the merger. In addition, as a result of the Markit share issuance, upon the completion of the merger, each Markit shareholder will have a percentage ownership of, and voting interest in, the combined company that is smaller than such shareholder’s percentage ownership of, and voting interest in Markit immediately prior to the merger. Immediately following the completion of the merger, the former IHS stockholders, as a group, and the former Markit shareholders, as a group, will own approximately 57% and 43%, respectively, of the combined company, calculated based on fully diluted shares as of the signing date and excluding shares held by the EBT. In addition, former directors of IHS will constitute six, and former directors of Markit will constitute five, of the members of the IHS Markit board. Accordingly, IHS stockholders and Markit shareholders will have less influence on the management and policies of the combined company than they now have on the management and policies of IHS or Markit, as applicable.

Markit Common Shares to Be Received by IHS Stockholders in the Merger Will Have Rights Different from the Shares of IHS Common Stock.

Upon completion of the merger, IHS stockholders will no longer be stockholders of IHS, but will instead be shareholders of Markit. The rights of former IHS stockholders who become Markit shareholders will be governed by the Markit amended bye-laws, which will be adopted, as of the effective time, in the form attached as Annex B. The rights associated with Markit common shares are different from the rights associated with shares of IHS common stock. See “Comparison of Rights of Markit shareholders and IHS stockholders.”

The Merger Agreement Contains Provisions that May Discourage Other Companies from Trying to Enter into a Strategic Transaction with Either IHS or Markit for Greater Consideration.

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to IHS or Markit both during the pendency of the proposed combination transaction as well as afterward, should the merger not be consummated, that might result in greater value to IHS stockholders or Markit shareholders, as applicable, than the merger. These merger agreement provisions include a general prohibition on each company from soliciting, or, subject to certain exceptions, entering into discussions with any third party regarding any acquisition or combination proposal or offers for competing transactions, subject to limited exceptions. Further, if either the IHS board or Markit board (i) withdraws, qualifies or modifies, or proposes publicly to withdraw, qualify or modify, or fails to make, in each case in any manner adverse to the other party, its approval or recommendation of the IHS required stockholder approval or the Markit required shareholder approvals, as applicable, or (ii) approves or recommends, or proposes publicly to approve or recommend, any alternative transaction, IHS or Markit, as applicable, will still be required to submit the merger, to a vote of its stockholders or shareholders, as applicable, at the respective special meetings unless the merger agreement is earlier terminated in accordance with its terms. For further information, please see the section entitled “The Merger Agreement—Description of The Merger Agreement—Changes in Board Recommendations.”

 

32


Table of Contents

In addition, IHS may be required to pay Markit a termination fee in cash equal to $272,000,000 or Markit may be required to pay to IHS a termination fee in cash equal to $195,000,000 in certain circumstances involving acquisition proposals for competing transactions. For further information, please see the section entitled “The Merger Agreement—Description of the Merger Agreement—Expenses and Termination Fees.”

If the merger agreement is terminated and either Markit or IHS determines to seek another strategic transaction, Markit or IHS, as applicable, may not be able to negotiate a transaction on terms comparable to, or better than, the terms of this transaction.

The Market Price of the Combined Company’s Common Shares May Be Volatile, and Holders of the Combined Company’s Common Shares Could Lose a Significant Portion of Their Investment Due to Drops in the Market Price of the Combined Company’s Common Shares Following Completion of the Merger.

The market price of the combined company’s common shares may be volatile, and following completion of the merger, shareholders may not be able to resell their IHS Markit common shares at or above the price at which they acquired the common shares pursuant to the merger agreement or otherwise due to fluctuations in its market price, including changes in price caused by factors unrelated to the combined company’s operating performance or prospects.

Specific factors that may have a significant effect on the market price for the combined company’s common shares include, among others, the following:

 

    changes in stock market analyst recommendations or earnings estimates regarding the combined company’s common shares, other companies comparable to it or companies in the industries they serve;

 

    actual or anticipated fluctuations in the combined company’s operating results of future prospects;

 

    reaction to public announcements by the combined company;

 

    strategic actions taken by the combined company or its competitors;

 

    failure of the combined company to achieve the perceived benefits of the transactions, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;

 

    adverse conditions in the financial market or general U.S. or international economic conditions, including those results from war, incidents of terrorism and responses to such events; and

 

    sales of common shares by the combined company, members of its management team or significant shareholders.

The Opinions of IHS’s and Markit’s Financial Advisors Will Not Be Updated to Reflect Changes in Circumstances Between the Signing of the Merger Agreement in March 2016 and the Completion of the Merger.

IHS and Markit have not obtained updated opinions from their respective financial advisors as of the date of this joint proxy statement/prospectus, and neither IHS nor Markit anticipates asking its financial advisors to update their opinions. Changes in the operations and prospects of IHS or Markit, general market and economic conditions and other factors that may be beyond the control of IHS or Markit, and on which IHS’s and Markit’s financial advisors’ opinions were based, may significantly alter the prices of the shares of IHS common stock or Markit common shares by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the date of such opinions. Because IHS’s and Markit’s financial advisors will not be updating their opinions, which were issued in connection with the signing of the merger agreement in March 2016, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The IHS board’s recommendation that IHS stockholders vote

 

33


Table of Contents

“FOR” the IHS merger proposal and the Markit board’s recommendation that Markit shareholders vote “FOR” the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal, however, are made as of the date of this joint proxy statement/prospectus. For a description of the opinions that IHS and Markit received from their respective financial advisors, please refer to “The Merger Agreement—Opinion of IHS’s Financial Advisor” and “The Merger Agreement—Opinion of Markit’s Financial Advisor.”

IHS Stockholders Will Not Be Entitled to Appraisal Rights in the Merger.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction.

Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, as of the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon a merger, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)-(c).

Because IHS common stock is listed on the NYSE, a national securities exchange, and is expected to continue to be so listed on the record date for the IHS special meeting, and because IHS stockholders will receive Markit common shares in the merger, which is expected to be listed on the NASDAQ upon the effective time, IHS stockholders will not be entitled to appraisal rights in the merger with respect to their shares of IHS common stock.

Markit Shareholders Will Not Be Entitled to Appraisal Rights in the Merger.

Under the Bermuda Act, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and who is not satisfied that fair value has been offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.

Because Markit is not a direct party to the merger and Markit shareholders will continue to own their Markit common shares, Markit shareholders will not be entitled to appraisal rights in connection with the merger.

Risks Related to the Business of the Combined Company Upon Completion of the Merger

The Combined Company May Fail to Realize the Anticipated Benefits of the Merger.

The success of the merger will depend on, among other things, the combined company’s ability to combine the IHS and Markit businesses in a manner that realizes anticipated synergies and exceeds the projected stand-alone cost savings and revenue growth trends identified by each company. On a combined basis, IHS Markit expects to benefit from significant cost synergies at both the business and corporate levels that will exceed the cost reductions achievable by Markit and IHS through their stand-alone cost reduction programs. Such cost synergies are expected to be driven by integrating corporate functions, reducing technology spending by optimizing IT infrastructure, using centers of excellence in cost-competitive locations and optimizing real estate and other costs.

 

34


Table of Contents

However, the combined company must successfully combine the businesses of IHS and Markit in a manner that permits these cost savings and synergies to be realized. In addition, the combined company must achieve the anticipated savings and synergies in a timely manner and without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, or the cost to achieve these synergies is greater than expected, then in either case the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

A variety of factors may adversely affect the combined company’s ability to realize the currently expected operating synergies, savings and other benefits of the merger, including the failure to successfully optimize the combined company’s facilities footprint, the inability to leverage existing customer relationships, the failure to identify and eliminate duplicative programs, and the failure to otherwise integrate Markit’s and IHS’s respective businesses, including their technology platforms.

The unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus are preliminary. Therefore, the actual financial condition and results of operations of IHS Markit after the merger may differ materially.

This joint proxy statement/prospectus includes unaudited pro forma condensed combined financial statements for the combined company, which we refer to as the pro forma financial statements, that combine the audited historical consolidated financial statements of Markit for the fiscal year ended December 31, 2015 with the audited historical consolidated financial statements of IHS for the fiscal year ended November 30, 2015, and the unaudited historical consolidated financial statements of Markit for the fiscal quarter ended December 31, 2015 with the unaudited historical consolidated financial statements of IHS for the fiscal quarter ended February 29, 2016, adjusted to give effect to the merger, and should be read in conjunction with such financial statements and accompanying notes which are incorporated by reference in this joint proxy statement/prospectus. The unaudited pro forma condensed combined balance sheet combines the historical balance sheets of Markit as of March 31, 2016 and IHS as of February 29, 2016 and gives pro forma effect to the merger as if it had been consummated on such dates. The unaudited pro forma condensed combined statements of income combine (i) the Markit audited consolidated statements of income for the fiscal year ended December 31, 2015 and the IHS audited consolidated statements of income for the fiscal year ended November 30, 2015, giving effect to the merger as if it had been consummated on the first day of such fiscal years and (ii) the Markit unaudited consolidated statements of income for the fiscal quarter ended December 31, 2015 and the IHS unaudited consolidated statements of income for the fiscal quarter ended February 29, 2016, giving effect to the merger as if it had been consummated on the first day of such fiscal quarters. The pro forma financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. The pro forma financial statements do not include, among other things, estimated cost or growth synergies, adjustments related to integration activities, future acquisitions or disposals not yet known or probable, including those that may be required by regulatory or governmental authorities in connection with the merger, or impacts of merger related change in control provisions that are currently not factually supportable and/or probable of occurring. Therefore, the pro forma financial statements are presented for informational purposes only and are not necessarily indicative of what the combined company’s actual financial condition or results of operations would have been had the merger been completed on the date indicated. Accordingly, the combined company’s business, assets, results of operations and financial condition may differ significantly from those indicated by the pro forma financial statements included in this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Financial Information.”

The Financial Analyses and Forecasts Considered by IHS and Markit and their Respective Financial Advisors May Not Be Realized, Which May Adversely Affect the Market Price of IHS Markit Common Shares Following the Completion of the Merger.

In performing their financial analyses and rendering their opinions regarding the fairness, from a financial point of view, of the exchange ratio, each of the respective financial advisors to Markit and IHS relied on, among other things, internal stand-alone financial analyses and forecasts as separately provided to each respective

 

35


Table of Contents

financial advisor by Markit and IHS. See “The Merger Agreement—Certain Markit Forecasts” and “The Merger Agreement—Certain IHS Forecasts.” These analyses and forecasts were prepared by, or as directed by, the managements of Markit or IHS, as applicable. None of these analyses or forecasts were prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, U.S. GAAP, IFRS or the guidelines established by the American Institute of Certified Public Accountants or the IASB, for preparation and presentation of financial forecasts. These projections are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These projections are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of Markit and IHS. There can be no assurance that Markit’s or IHS’s financial condition or results of operations will be consistent with those set forth in such analyses and forecasts, which could have a material impact on the market price of IHS Markit common shares following the merger.

Combining the Businesses of IHS and Markit May Be More Difficult, Costly or Time-Consuming than Expected, Which May Adversely Affect the Combined Company’s Results and Negatively Affect the Value of IHS Markit Common Shares Following the Merger.

IHS and Markit have entered into the merger agreement because each believes that the merger will be beneficial to its respective company and stockholders or shareholders, as applicable, and that combining the businesses of IHS and Markit will produce benefits and cost savings. However, IHS and Markit have historically operated as independent companies and will continue to do so until the completion of the merger. Following the completion of the merger, the combined company’s management will need to integrate IHS’s and Markit’s respective business. The combination of two independent businesses is a complex, costly and time consuming process and the management of the combined company may face significant challenges in implementing such integration, many of which may be beyond the control of management, including, without limitation:

 

    latent impacts resulting from the diversion of Markit’s and IHS’s respective management teams attention from ongoing business concerns as a result of the devotion of management’s attention to the merger and performance shortfalls at one or both of the companies;

 

    difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;

 

    the possibility of faulty assumptions underlying expectations regarding the integration process;

 

    unanticipated issues in integrating information technology, communications programs, financial procedures and operations, and other systems, procedures and policies;

 

    difficulties in managing a larger combined company, addressing differences in business culture and retaining key personnel;

 

    unanticipated changes in applicable laws and regulations;

 

    managing tax costs or inefficiencies associated with integrating the operations of the combined company;

 

    coordinating geographically separate organizations; and

 

    unforeseen expenses or delays associated with the merger.

Some of these factors will be outside of the control of Markit and IHS and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue which could materially impact our business, financial conditions and results of operations. The integration process and other disruptions resulting from the merger may also adversely affect the combined company’s relationships with employees, suppliers, customers, distributors, licensors and others with whom IHS and Markit have business or other dealings, and difficulties in integrating the businesses or regulatory functions of IHS and Markit could harm the reputation of the combined company.

 

36


Table of Contents

If the combined company is not able to successfully combine the businesses of IHS and Markit in an efficient, cost-effective and timely manner, the anticipated benefits and cost savings of the merger may not be realized fully, or at all, or may take longer to realize than expected, and the value of IHS Markit common shares, the revenues, levels of expenses and results of operations may be affected adversely. If the combined company is not able to adequately address integration challenges, the combined company may be unable to successfully integrate IHS’s and Markit’s operations or realize the anticipated benefits of the transactions contemplated by the merger agreement.

IHS Markit has Incurred and Expects to Incur Additional Significant Costs in Connection with the Integration of the Combined Company.

There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the merger. While both IHS and Markit have assumed that a certain level of expenses would be incurred in connection with the merger and the other transactions contemplated by the merger agreement, there are many factors beyond their control that could affect the total amount of, or the timing of, anticipated expenses with respect to the integration and implementation of the combined businesses.

There may also be additional unanticipated significant costs in connection with the merger that the combined company may not recoup. These costs and expenses could reduce the benefits and additional income IHS Markit expects to achieve from the merger. Although IHS Markit expects that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

Inability to Access the Debt Capital Markets Could Impair the Combined Company’s Liquidity, Business or Financial Condition.

Each of IHS and Markit has relied and continues to rely on access to the debt capital markets to finance their day-to-day and long-term operations. An inability to raise money in the long-term or short-term debt markets could have a substantial negative effect on the liquidity of the combined company. The combined company’s access to the debt markets in amounts adequate to finance its activities could be impaired as a result of potential factors, including factors that are not specific to the combined company, such as a severe disruption of the financial markets and interest rate fluctuations.

The costs and availability of financing from the debt capital markets will be dependent on the short-term and long-term credit ratings of the combined company. The level and quality of the combined company’s earnings, operations, business and management, among other things, will impact the determination of the combined company’s credit ratings. A decrease in the ratings assigned to the combined company by the ratings agencies may negatively impact the combined company’s access to the debt capital markets and increase the combined company’s cost of borrowing. There can be no assurance that the combined company will maintain the current creditworthiness or prospective credit ratings of Markit or IHS, and any actual or anticipated changes or downgrades in such credit ratings may have a negative impact on the liquidity, capital position or access to capital markets of the combined company.

The U.S. Internal Revenue Service (the “IRS”) may not agree with the conclusion that IHS Markit is to be treated as a foreign corporation for U.S. federal income tax purposes following the merger.

Although Markit is incorporated in Bermuda and is and has been treated as (and IHS Markit after the merger is expected to be treated as) tax resident in the United Kingdom, the IRS may assert that IHS Markit should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the Code (referred to as “Section 7874”). Under current U.S. federal income tax law, a corporation generally will be considered to be resident for U.S. federal income tax purposes in its place of organization or incorporation. Accordingly, under the generally applicable U.S. federal income tax rules, IHS Markit would generally be classified as a non-U.S. corporation (and, therefore, not a U.S. tax resident).

 

37


Table of Contents

Section 7874 and the Treasury regulations promulgated thereunder, however, contain specific rules that may cause a non-U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes under certain circumstances.

Section 7874 provides that if, following an acquisition of a U.S. corporation by a non-U.S. corporation, at least 80% of the acquiring non-U.S. corporation’s stock (by vote or value) is considered to be held by former shareholders of the U.S. corporation by reason of holding stock of such U.S. corporation (such percentage referred to as the “ownership percentage” and such test referred to as the “ownership test”) and the “expanded affiliated group” which includes the acquiring non-U.S. corporation does not have substantial business activities in the country in which the acquiring non-U.S. corporation is created or organized, then the non-U.S. corporation would be treated as a U.S. corporation for U.S. federal income tax purposes even though it is a corporation created and organized outside the United States.

Section 7874 is not expected to apply to the merger because the former IHS stockholders are expected to hold, for purposes of the relevant Section 7874 rules, less than 60% of the IHS Markit common shares (by vote and value) after the merger by reason of holding IHS common stock. However, whether the ownership test has been satisfied is determined only after the closing of the merger, by which time there could be adverse changes to the relevant facts and circumstances, such as the number of equity-based awards of IHS or Markit that are granted, vested or are exercised before the closing of the merger and the number of Markit common shares delivered under Markit’s accelerated share repurchase programs. In addition, for purposes of determining the ownership percentage of the former IHS stockholders, the former IHS stockholders will be deemed to own an amount of IHS Markit common shares in respect of certain prior distributions (including stock repurchases) by IHS prior to the closing of the merger. A number of these factors are correlated with the share prices of IHS and Markit, and a substantial decline in Markit’s share price could result in former IHS stockholders being treated as holding 60% or more of IHS Markit common shares after the merger for purposes of the ownership test. Further, a subsequent change in law might cause IHS stockholders to be treated as owning 80% or more of the IHS Markit common shares after the merger for U.S. federal income tax purposes, including with retroactive effect to the date of the merger. In such event, IHS Markit could be treated as a U.S. corporation for U.S. federal income tax purposes, and IHS Markit could be liable for substantial additional U.S. federal income tax on its operations and income following the closing of the merger. Additionally, if IHS Markit were treated as a U.S. corporation for U.S. federal income tax purposes, non-U.S. IHS Markit shareholders would be subject to U.S. withholding tax on the gross amount of any dividends paid by IHS Markit to such shareholders. There can be no assurance that the IRS will agree with the position that IHS Markit is to be treated as a non-U.S. corporation.

Please see “The Merger Agreement—Certain U.S. Federal Income Tax Consequences—Tax Consequences of the Merger to IHS Markit,” beginning on page 105 for a full discussion of the application of Section 7874 to the merger.

The IRS may not agree with the conclusion that IHS Markit is not subject to certain adverse consequences for U.S. federal income tax purposes following the merger.

As described above, based on the rules for determining share ownership under Section 7874 and certain factual assumptions, after the merger, former IHS stockholders are expected to hold, for purposes of the relevant Section 7874 rules, less than 60% of the IHS Markit common shares (by vote and value) after the merger by reason of holding IHS common stock. However, if IHS stockholders were treated as owning 60% or more (but less than 80%) of the IHS Markit common shares after the merger for U.S. federal income tax purposes, IHS could be prohibited from using its foreign tax credits or other attributes to offset the income or gain recognized by reason of the transfer of property to a foreign related person or any income received or accrued by reason of a license of any property by IHS to a foreign related person. In addition, on April 4, 2016, the U.S. Treasury and the IRS released temporary regulations that, in such case, may limit the combined company’s ability to integrate certain of its non-U.S. operations or access cash earned by IHS’s non-U.S. subsidiaries, in each case without incurring substantial U.S. tax liabilities. Moreover, in such case, Section 4985 of the Code and rules related

 

38


Table of Contents

thereto would impose an excise tax on the value of certain IHS stock compensation held directly or indirectly by certain “disqualified individuals” (including officers and directors of IHS) at a rate equal to 15%.

As previously discussed, based on the rules for determining share ownership under Section 7874 and the Treasury regulations promulgated thereunder, and certain factual assumptions, the ownership percentage is expected to be less than 60%. However, as described above, there is limited guidance regarding the application of Section 7874, and there can be no assurance that the IRS will agree with the position that the former IHS stockholders will be treated as holding less than 60% of the IHS Markit common shares (by vote and value) after the merger by reason of holding IHS common stock for purposes of the ownership test.

Please see “The Merger Agreement—Certain U.S. Federal Income Tax Consequences—Tax Consequences of the Merger to IHS Markit,” beginning on page 105 for a full discussion of the application of Section 7874 to the merger.

Receipt of the merger consideration may be treated as a dividend, instead of proceeds of a sale, for some IHS stockholders.

Although it is expected that the receipt of the merger consideration by most, if not all, holders of IHS common stock pursuant to the merger will be treated for U.S. federal income tax purposes as the proceeds from the sale of stock, some IHS stockholders may be treated as having received a taxable dividend. If you are a non-U.S. stockholder, the paying agent or other withholding agent for the transaction may withhold U.S. federal income tax with respect to such deemed dividend and may sell a portion of your IHS Markit common shares to satisfy such withholding obligation. See “The Merger Agreement—Certain U.S. Federal Income Tax Consequences.”

Proposed Regulations under Section 385 of the Code may limit IHS Markit’s ability to use intercompany debt.

On April 4, 2016, the U.S. Treasury and the IRS released proposed Treasury regulations under Section 385 of the Code. In general, the proposed Treasury regulations would (i) require intercompany debt to be accompanied by extensive contemporaneous documentation in order to be treated as debt for U.S. federal income tax purposes; (ii) treat intercompany debt as equity for U.S. federal income tax purposes in certain circumstances; and (iii) authorize the IRS to treat intercompany debt as in part debt and in part equity for U.S. federal income tax purposes in certain circumstances. The scope and interpretation of the proposed Treasury regulations are subject to significant uncertainty. However, if finalized in their current form, the proposed Treasury regulations may limit the ability of IHS Markit to utilize intercompany debt and may increase cash taxes for IHS Markit.

Changes to the U.S. Model Income Tax Treaty could adversely affect IHS Markit.

On February 17, 2016, the U.S. Treasury released a newly revised U.S. model income tax convention (the “model”), which is the baseline text used by the U.S. Treasury to negotiate tax treaties. The new model treaty provisions were preceded by draft versions released by the U.S. Treasury on May 20, 2015 (the “May 2015 draft”) for public comment. The revisions made to the model address certain aspects of the model by modifying existing provisions and introducing entirely new provisions. Specifically, the new provisions target (i) permanent establishments subject to little or no foreign tax, (ii) special tax regimes, (iii) expatriated entities subject to Section 7874, (iv) the anti-treaty shopping measures of the limitation on benefits article and (v) subsequent changes in treaty partners’ tax laws.

With respect to new model provisions pertaining to expatriated entities, because it is expected that the merger will not result in the creation of an expatriated entity as defined in Section 7874, payments of interest, dividends, royalties and certain other items of income by or to IHS and/or its U.S. affiliates after the merger to or from non-U.S. persons would not be expected to become subject to full withholding tax, even if applicable

 

39


Table of Contents

treaties were subsequently amended to adopt the new model provisions. In response to comments the U.S. Treasury received regarding the May 2015 draft, the new model treaty provisions pertaining to expatriated entities states that the definition of “expatriated entity” has the meaning ascribed to such term under Section 7874 (a)(2)(A) as of the date the relevant bilateral treaty is signed. However, as discussed above, the rules under Section 7874 are relatively new, complex and are the subject of current and future legislative and regulatory changes. Accordingly, there can be no assurance that the IRS will agree with the position that the merger does not result in the creation of an expatriated entity (within the meaning of Section 7874) under the law as in effect at the time the applicable treaty were amended or that such a challenge would not be sustained by a court, or that such position would not be affected by future or regulatory action which may apply retroactively to the merger.

Future changes to U.S., U.K. and foreign tax laws could adversely affect the combined company.

As discussed above, under current law, IHS Markit is expected to be treated as a non-U.S. corporation for U.S. federal income tax purposes. However, changes to Section 7874, or the Treasury regulations promulgated thereunder, could affect the combined company’s status as a non-U.S. corporation for U.S. federal income tax purposes. Any such changes could have prospective or retroactive application, and may apply even if enacted or asserted after the merger is consummated. If the combined company were to be treated as a U.S. corporation for U.S. federal income tax purposes, it could be subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation.

Recent legislative proposals have aimed to expand the scope of U.S. corporate tax residence, including in such a way as would cause IHS Markit to be treated as a U.S. corporation if the management and control of the combined company and its affiliates were determined to be located primarily in the United States, or would reduce the ownership percentage at or above which the combined company would be treated as a U.S. corporation. Thus, the rules under Section 7874 and other relevant provisions could change on a prospective or retroactive basis in a manner that could adversely affect IHS Markit after the merger.

In addition, the U.S. Congress, the Organisation for Economic Co-operation and Development and other government agencies in jurisdictions where IHS and Markit and their respective affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. The Organisation for Economic Co-operation and Development addressed fifteen specific actions as part of a comprehensive plan to create an agreed set of international rules for fighting base erosion and profit shifting that was presented in a report to the G20 finance ministers in October 2015. The G20 finance ministers subsequently endorsed the comprehensive plan. As a result, the tax laws in the United States, the United Kingdom, and other countries in which IHS and Markit and their respective affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect IHS Markit after the merger.

If Markit is, or IHS Markit were to become, a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes, U.S. investors in IHS Markit common shares would be subject to certain adverse U.S. federal income tax consequences.

In general, a non-U.S. corporation will be a PFIC for any taxable year if (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. Markit believes that it was not a PFIC for its 2015 taxable year, and IHS and Markit do not expect IHS Markit to be a PFIC for its 2016 taxable year or in the foreseeable future. However, there can be no assurance that IHS Markit will not be considered a PFIC for any taxable year. If IHS Markit were a PFIC for any taxable year during which a U.S. investor held IHS Markit common shares, such investor would be subject to certain adverse U.S. federal income tax consequences, such as ineligibility for any preferred tax rates on capital gains or on actual or deemed dividends, an additional interest charge on certain taxes treated as deferred, and additional reporting requirements under U.S. federal income tax laws and regulations. If IHS Markit were characterized as a PFIC, a U.S. investor may be able to make a “mark-

 

40


Table of Contents

to-market” election with respect to its IHS Markit common shares that would alleviate some of the adverse consequences of PFIC status. Although U.S. tax rules also permit a U.S. investor to make a “qualified electing fund” election with respect to the shares of a foreign corporation that is a PFIC if the foreign corporation provides certain information to its investors, it is not expected that IHS Markit will provide the information that would be necessary for a U.S. investor to make a valid “qualified electing fund” election with respect to IHS Markit common shares. See “The Merger Agreement—Certain U.S. Federal Income Tax Consequences— Certain U.S. Federal Income Tax Consequences of the Ownership and Disposition of IHS Markit Common Shares—Tax Consequences to U.S. Holders—Passive Foreign Investment Company Rules.”

Following the merger, IHS Markit will be a foreign private issuer under the rules and regulations of the SEC and will therefore qualify for certain accommodations under the U.S. securities laws, which may result in you receiving less information about IHS Markit than you currently receive about IHS and/or you being provided with less protection than you currently have as an IHS stockholder.

Following the merger, IHS Markit will retain its status as a foreign private issuer, or FPI, until at least the end of fiscal 2017. For so long as IHS Markit retains its FPI status, IHS Markit will qualify for certain accommodations under the U.S. securities laws, including (i) being able to report its financial results in accordance with IFRS as adopted by the IASB, (ii) being subject to reduced disclosure requirements with respect to quarterly reporting and executive compensation, (iii) not being subject to the proxy rules under the Exchange Act, Section 16 under the Exchange Act or Regulation FD, and (iv) being able to follow certain home country rules in lieu of domestic company requirements under NASDAQ rules. While IHS Markit will report its financial results in accordance with U.S. GAAP and intends to elect to file its annual and interim reports on Forms 10-K, 10-Q and 8-K, regardless of whether IHS Markit continues to qualify as an FPI following completion of the transaction, IHS Markit will not be required to file such domestic U.S. company reports and may not file periodic reports and financial statements with the SEC as frequently or as promptly as domestic U.S. companies with securities registered under the Exchange Act for so long as IHS Markit retains its status as an FPI. During this time period, IHS Markit will also not be required to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information, and IHS Markit’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of IHS Markit common shares. Accordingly, after the merger, if you continue to hold IHS Markit common shares, you may receive less information about IHS Markit than you currently receive about IHS.

As a foreign private issuer, IHS Markit may also follow certain home country corporate governance practices instead of those otherwise required under the applicable rules of the NASDAQ for domestic U.S. issuers for so long as IHS Markit retains foreign private issuer status. For instance, IHS Markit may follow home country practice in Bermuda with regard to, among other things, composition of its board of directors and approval of compensation of officers. In addition, for so long as IHS Markit retains its FPI status, it may follow its home country law instead of the applicable rules of the NASDAQ that require that it obtain shareholder approval for certain dilutive events, such as the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or greater interest in the company, and certain acquisitions of the stock or assets of another company. IHS and Markit have not yet determined whether IHS Markit will follow IHS Markit’s home country governance practices or the requirements that would otherwise apply to a domestic U.S. company listed on the NASDAQ. Following IHS Markit’s home country governance practices as opposed to the requirements that would otherwise apply to a domestic U.S. company listed on the NASDAQ may provide you with less protection than you currently have as an IHS stockholder.

Risks Related to Markit’s Business

You should read and consider risk factors specific to Markit’s businesses that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 3D of Markit’s Annual

 

41


Table of Contents

Report on Form 20-F for the fiscal year ended December 31, 2015, and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

Risks Related to IHS’s Business

You should read and consider risk factors specific to IHS’s businesses that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 1A of IHS’s Annual Report on Form 10-K for the fiscal year ended November 30, 2015, and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

42


Table of Contents

THE COMPANIES

MARKIT

Markit Ltd.

4th Floor, Ropemaker Place

25 Ropemaker Street

London EC2Y 9LY

England

Telephone: +44 20 7260 2000

The Markit group, founded in 2003, is a leading global provider of financial information services. Markit provides products that enhance transparency, reduce risk and improve operational efficiency. Markit’s customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Markit employs over 4,200 people in 13 countries.

Markit’s headquarters and principal executive offices are located at 4th Floor, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England. Markit maintains a registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

Markit common shares are listed on the NASDAQ under the symbol “MRKT”.

Additional information about Markit and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

IHS

IHS Inc.

15 Inverness Way East

Englewood, CO 80112

Telephone: (303) 397-2969

IHS Inc. (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 140 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs nearly 9,000 people in 33 countries around the world.

IHS Class A common stock is listed on the NYSE under the symbol “IHS”.

Additional information about IHS and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 201.

MERGER SUB

Marvel Merger Sub, Inc.

c/o Markit North America, Inc.

620 Eighth Avenue, 35th Floor

New York, NY 10018

Marvel Merger Sub, Inc., which we refer to as Merger Sub, is a Delaware corporation and an indirect and wholly owned subsidiary of Markit. To date, Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the merger. Pursuant to the merger agreement, Merger Sub will be merged with and into IHS, with IHS surviving the merger as an indirect wholly owned subsidiary of Markit.

 

43


Table of Contents

THE MARKIT SPECIAL MEETING

General

This section contains information about the Markit special meeting that has been called to consider and vote on the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal. This joint proxy statement/prospectus is being furnished to Markit shareholders in connection with the solicitation of proxies by the Markit board for use at the Markit special meeting and any postponements or adjournments of such special meeting. This joint proxy statement/prospectus provides Markit shareholders with information about the Markit special meeting and should be read carefully in its entirety.

Date, Time and Place

The Markit special meeting will be held at Davis Polk & Wardwell, 5 Aldermanbury Square, London EC2V 7HR, England, on July 11, 2016, at 4:00 p.m., London time.

Purpose of the Markit Special Meeting

At the Markit special meeting, Markit shareholders will be asked to vote on the following proposals:

 

    Proposal 1 (Markit share issuance proposal)—Approval of the Markit Share Issuance. To consider and vote on the Market share issuance proposal;

 

    Proposal 2 (Markit amended bye-laws proposal)—Approval of the Markit Amended Bye-Laws. To consider and vote on the Markit amended bye-laws proposal;

 

    Proposal 3 (Markit name change proposal)—Approval of the Markit Name Change. To consider and vote on the Markit name change proposal; and

 

    Proposal 4 (Markit adjournment proposal)—Adjournment of the Markit Special Meeting. To consider and vote on the Markit adjournment proposal (if necessary or appropriate).

Recommendation of the Markit Board

After careful consideration, the Markit board, on March 19, 2016, unanimously (a) approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the merger, are advisable for, fair to and in the best interests of Markit; (b) authorized and approved the execution, delivery and performance of the merger agreement by Markit and approved the merger; (c) approved, subject to the requisite shareholder approval, the Markit share issuance, the Markit amended bye-laws and the Markit name change and (d) recommended the approval of the Markit share issuance, the Markit amended bye-laws and the Markit name change by the Markit shareholders and directed that the Markit share issuance, the Markit amended bye-laws and the Markit name change be submitted for consideration by Markit’s shareholders at the Markit special meeting.

The Markit board unanimously recommends that the Markit shareholders vote “FOR” each of the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal.

Markit Record Date; Shareholders Entitled to Vote

Only holders of record of Markit common shares at the close of business on June 10, 2016, the record date for the Markit special meeting, will be entitled to notice of, and to vote at, the Markit special meeting or any adjournments or postponements thereof.

 

44


Table of Contents

As of the close of business on May 31, 2016, there were 207,497,790 Markit common shares issued and outstanding and entitled to vote at the Markit special meeting, including 25,219,470 common shares held by the EBT.

Shares and Voting of Markit’s Directors and Executive Officers

As of the close of business on May 31, 2016, approximately 15.66% of the issued and outstanding Markit common shares were held by Markit directors and executive officers and their affiliates. We currently expect that Markit’s directors and executive officers will vote their Markit common shares in favor of the above listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Quorum

A quorum is necessary to transact business at the Markit special meeting. Two or more persons present at the start of the Markit special meeting and representing in person or by proxy in excess of 50% of the total issued shares in Markit entitled to vote at the Markit special meeting (including the Markit common shares held by the EBT) will form a quorum for the transaction of business at the Markit special meeting.

Required Vote

Approval of the Markit share issuance requires the affirmative vote of a majority of the votes cast at the Markit special meeting.

Approval of the Markit amended bye-laws requires the affirmative vote at the Markit special meeting of not less than 66 2/3% of the votes attaching to all shares in issue as of the Markit record date.

Approval of the Markit name change requires the affirmative vote of a majority of the votes cast at the Markit special meeting.

Approval of the Markit adjournment proposal requires the affirmative vote of a majority of the voting rights held by those shareholders present at the Markit special meeting, in person or by proxy.

Under the NASDAQ rules, if you hold your Markit common shares in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the Markit special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2, Proposal 3 and Proposal 4 at the Markit special meeting.

Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal 2 and Proposal 4 and will have no effect on Proposal 1 or Proposal 3 (assuming a quorum is present). However, because none of the proposals to be voted on at the Markit special meeting are routine matters for which brokers may have discretionary authority to vote, Markit does not expect any broker non-votes at the Markit special meeting.

Abstentions and Broker Non-Votes

A broker non-vote occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such instructions. Under the NASDAQ rules, “non-routine” matters include the Markit share issuance proposal (Proposal 1), the Markit amended bye-laws proposal (Proposal 2), the Markit name change proposal (Proposal 3) and the Markit adjournment proposal (Proposal 4). Because none of the proposals to be voted on at the Markit special meeting are routine matters for which brokers

 

45


Table of Contents

may have discretionary authority to vote, Markit does not expect any broker non-votes at the Markit special meeting. If you hold your shares in street name, it is critical that you cast your vote by instructing your bank, broker or other nominee on how to vote if you want your vote to be counted at the Markit special meeting. The NASDAQ rules governing brokers’ discretionary authority will not permit brokers to exercise discretionary authority regarding any of the proposals to be voted on at the Markit special meeting.

If you are a Markit shareholder and you mark your proxy or voting instructions to abstain or fail to instruct your broker or nominee to vote, it will have the effect of a vote “AGAINST” the Markit amended bye-laws proposal and the Markit adjournment proposal but will have no effect on the Markit share issuance proposal or the Markit name change proposal, assuming a quorum is present.

Voting in Person

All shareholders will need proof of ownership of shares in Markit, and may be asked to present a form of personal photo identification, in order to be admitted to the Markit special meeting. In addition, if your shares are held in the name of your broker, bank, or other nominee and you wish to attend the Markit special meeting, you must bring an account statement or letter from the broker, bank, or other nominee indicating that you were the owner of the shares on June 10, 2016.

In addition, street name holders who wish to vote in person at the Markit special meeting must obtain a “legal proxy” from the bank, broker or other holder of record that holds their shares in order to be entitled to vote at the Markit special meeting.

EBT

As of the Markit record date, 25,219,470 Markit common shares were held by the EBT. The trustee of the EBT may not vote any Markit common shares held by the EBT unless Markit directs otherwise. Markit intends to direct the EBT to vote the Markit common shares held by the EBT on each proposal at the Markit special meeting in accordance with the percentages voted by other holders of Markit common shares on such proposal.

Voting of Proxies

A proxy card is enclosed for your use. Markit requests that you mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed, Markit common shares represented by it will be voted at the Markit special meeting or any adjournment thereof in accordance with the instructions contained in the proxy. If no specific instructions are given by you when you execute your voting form, as explained on the form, your shares will be voted as recommended by the Markit board as stated in this joint proxy statement/prospectus, specifically “FOR” the Markit share issuance proposal, “FOR” the Markit amended bye-laws proposal, “FOR” the Markit name change proposal and “FOR” the Markit adjournment proposal.

At the date hereof, Markit’s management has no knowledge of any business that will be presented for consideration at the Markit special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related Markit proxy card other than the matters set forth in Markit’s Notice of Special Meeting of Shareholders. If any other matter is properly presented at the Markit special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

Your vote is important. Accordingly, please mark, sign, date and return the enclosed proxy card whether or not you plan to attend the Markit special meeting in person.

How Proxies Are Counted

All Markit common shares represented by properly executed proxies received in time for the Markit special meeting will be voted at the meeting in the manner specified by the Markit shareholder giving those proxies.

 

46


Table of Contents

Properly executed proxies that do not contain voting instructions with respect to the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal or the Markit adjournment proposal will be voted as recommended by the Markit board as stated in this joint proxy statement/prospectus, specifically “FOR” the Markit share issuance proposal, “FOR” the Markit amended bye-laws proposal, “FOR” the Markit name change proposal and “FOR” the Markit adjournment proposal.

Voting of Markit Common Shares Held in Street Name

If you hold Markit shares through a broker or other nominee, you may instruct your broker or other nominee to vote your Markit shares by following the instructions that the broker or nominee provides to you with these materials. Most brokers offer the ability for shareholders to submit voting instructions by mail by completing a voting instruction card, by telephone and via the Internet. If you do not provide voting instructions to your broker, your Markit shares will not be voted on any proposal as your broker does not have discretionary authority to vote on any of the proposals to be voted on at the Markit special meeting.

Broker non-votes are counted for the purpose of determining the presence or absence of a quorum for purposes of the Markit special meeting but are not considered votes cast. With respect to the Markit amended bye-laws proposal and the Markit adjournment proposal, a broker non-vote will have the effect of a vote “AGAINST” the proposal. With respect to the Markit share issuance proposal and the Markit name change proposal, a broker non-vote will have no effect on such proposals. Because none of the proposals to be voted on at the Markit special meeting are routine matters for which brokers may have discretionary authority to vote, Markit does not expect any broker non-votes at the Markit special meeting.

If your shares are held in the name of your broker, bank, or other nominee and wish to vote your Markit common shares in person at the Markit special meeting, you must obtain a legal proxy from your broker or nominee and present it to the inspector of election with your ballot when you vote at the Markit special meeting.

Revocability of Proxies and Changes to a Markit Shareholders’ Vote

You may change your vote or revoke your proxy at any time before it is exercised at the Markit special meeting. You may do this in one of four ways:

 

    filing with the Secretary of Markit prior to the Markit special meeting a written notice of revocation by mail to Markit Ltd., Attention: Company Secretary, c/o Markit Legal Department, 4th Floor, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England;

 

    submitting a duly executed proxy bearing a later date that Markit receives prior to the conclusion of voting at the Markit special meeting;

 

    attending the Markit special meeting and voting in person; or

 

    logging on to www.proxyvote.com in the same manner you would to submit your proxy electronically or calling (800) 690-6903, and in either case following the instructions to revoke or change your voting instructions.

Your attendance in and of itself will not revoke any proxy.

Written notices of revocation and other communications about revoking Markit proxies should be addressed to:

Company Secretary

c/o Markit Legal Department

4th Floor, Ropemaker Place

25 Ropemaker Street

London EC2Y 9LY

England

 

47


Table of Contents

If your Markit shares are held in street name, you should follow the instructions of your broker regarding the revocation of proxies.

Once voting on a particular matter is completed at the Markit special meeting, a Markit shareholder will not be able to revoke its proxy or change its vote as to that matter.

All Markit common shares represented by valid proxies that Markit receives through this solicitation and that are not revoked will be voted in accordance with the instructions on the proxy card. If a Markit shareholder makes no specifications on its proxy card as to how it should want its Markit common shares voted before signing and returning it, such proxy will be voted as recommended by the Markit board as stated in this joint proxy statement/prospectus, specifically “FOR” the Markit share issuance proposal, “FOR” the Markit amended bye-laws proposal, “FOR” the Markit name change proposal and “FOR” the Markit adjournment proposal.

Tabulation of Votes

The Markit board has appointed Broadridge Financial Solutions, Inc. to serve as the inspector of election for the Markit special meeting. The inspector of election will, among other matters, determine the number of Markit common shares represented at the Markit special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to the Markit shareholders.

Solicitation of Proxies

Markit is soliciting proxies to provide an opportunity to all Markit shareholders to vote on agenda items, whether or not the shareholders are able to attend the Markit special meeting or an adjournment or postponement thereof. Markit will bear the entire cost of soliciting proxies from its shareholders, except that Markit and IHS have agreed to each pay one half of the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other similar fees payable to the SEC in connection with this joint proxy statement/prospectus. In addition to the solicitation of proxies by mail, Markit will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of Markit common shares and secure their voting instructions, if necessary. Markit will reimburse the record holders on request for their reasonable expenses in taking those actions.

Markit has also made arrangements with Morrow Sodali Global LLC to assist in soliciting proxies and in communicating with Markit shareholders and estimates that it will pay them a fee of approximately $50,000 plus out-of-pocket fees and expenses for these services. Proxies also may be solicited on behalf of Markit in person, by mail, by telephone, by facsimile, by messenger, via the Internet or by other means of communication, including electronic communication, or by Markit directors, officers and employees in person, by mail, by telephone, by facsimile, via the Internet or by other means of communication, including electronic communication. Directors, officers and employees of Markit will not be specially compensated for their services or solicitation in this regard.

Adjournments

If a quorum is not present within half an hour from the time appointed for the Markit special meeting, the meeting will stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Secretary of Markit may determine. If a quorum is present at the Markit special meeting but there are not sufficient votes at the time of the Markit special meeting to approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal, then the chairman of the Markit special meeting may adjourn the meeting with the consent of the shareholders holding a majority of the voting rights of those shareholders present in person or by proxy (and will if so directed by shareholders holding a majority of the voting rights of those shareholders present in person or by proxy). Unless the Markit special meeting is adjourned to a specific date, place and time announced at the meeting being adjourned, fresh notice of

 

48


Table of Contents

the date, place and time for the resumption of the adjourned meeting shall be given to each Markit shareholder entitled to attend and vote thereat in accordance with Markit’s bye-laws.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Markit special meeting, please contact Morrow Sodali Global LLC, the proxy solicitation agent for Markit, at 470 West Avenue, Stamford, CT 06902. Banks and brokers please call: (203) 658-9400. Shareholders please call: (877) 815-6525.

 

49


Table of Contents

THE IHS SPECIAL MEETING

General

This section contains information about the IHS special meeting that has been called to consider and vote on the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal. This joint proxy statement/prospectus is being furnished to IHS stockholders in connection with the solicitation of proxies by the IHS board for use at the IHS special meeting and any adjournments of such special meeting. This joint proxy statement/prospectus provides IHS stockholders with information about the IHS special meeting and should be read carefully in its entirety.

Date, Time and Place

The IHS special meeting will be held at IHS Corporate Headquarters, 15 Inverness Way East, Englewood, Colorado 80112, on July 11, 2016, at 9:00 a.m., Mountain Daylight Time.

Purpose of the IHS Special Meeting

At the IHS special meeting, IHS stockholders will be asked to vote on the following proposals:

 

    Proposal 1 (IHS merger proposal)—Adoption of the Merger Agreement. To consider and vote on the IHS merger proposal;

 

    Proposal 2 (IHS compensation proposal)—Approval, on an Advisory (Non-Binding) Basis, of Certain Compensatory Arrangements with IHS Named Executive Officers. To consider and vote on the IHS compensation proposal; and

 

    Proposal 3 (IHS adjournment proposal)—Adjournment of the IHS Special Meeting. To consider and vote on the IHS adjournment proposal (if necessary or appropriate).

Recommendation of the IHS Board

After careful consideration, the IHS board, on March 19, 2015, unanimously (a) approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, IHS and its stockholders; (b) authorized and approved the execution, delivery and performance of the merger agreement by IHS and approved the merger; and (c) recommended the adoption of the merger agreement by the IHS stockholders and directed that the merger agreement be submitted for consideration by the IHS stockholders at the IHS special meeting.

The IHS board unanimously recommends that IHS stockholders vote:

“FOR” the IHS merger proposal;

“FOR” the IHS compensation proposal; and

“FOR” the IHS adjournment proposal.

IHS Record Date; Stockholders Entitled to Vote

Only holders of record of IHS common stock at the close of business on the IHS record date for voting at the IHS special meeting are entitled to vote at the IHS special meeting. On the IHS record date, 67,452,437 shares of IHS common stock will be entitled to vote. There were no shares of IHS preferred stock outstanding. A list of stockholders of record entitled to vote at the IHS special meeting shall be open to any stockholder for any purpose relevant to such meeting for ten days before the IHS special meeting, during normal business hours, at the Office of the Corporate Secretary, 15 Inverness Way East, Englewood, Colorado 80112.

 

50


Table of Contents

Shares and Voting of IHS’s Directors and Executive Officers

As of the close of business on May 31, 2016, 1% of the outstanding shares of IHS common stock were held by IHS’s directors and executive officers and their affiliates. We currently expect that IHS’s directors and executive officers will vote their shares of IHS common stock in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Quorum

A quorum of stockholders is necessary to transact business at the IHS special meeting. A quorum exists if the holders of at least a majority of the shares of IHS common stock entitled to vote are present either in person or by proxy at the meeting. Abstentions and broker non-votes will be counted in determining whether a quorum exists. Because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting.

Required Vote

Proposal 1: Vote on the IHS merger proposal. The votes cast “FOR” this proposal must represent a majority of all outstanding shares of IHS common stock entitled to vote thereon.

Proposal 2: Advisory vote on the IHS compensation proposal. The affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter is required to approve the IHS compensation proposal.

Proposal 3: Vote on the IHS adjournment proposal. The affirmative vote of IHS stockholders present, in person or represented by proxy, and entitled to vote at the IHS special meeting representing a majority of the votes actually cast on the matter is required to approve the IHS adjournment proposal.

Under the NYSE rules, if you hold your shares of IHS common stock in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the IHS special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2 or Proposal 3 at the IHS special meeting.

Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal 1 and will have no effect on Proposal 2 and Proposal 3 (assuming a quorum is present). However, because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting.

Abstentions and Broker Non-Votes

A broker non-vote occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares, and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such instructions. Under the NYSE rules, “non-routine” matters include the IHS merger proposal (Proposal 1), the vote, on an advisory basis, on the IHS compensation proposal (Proposal 2) and the IHS adjournment proposal (Proposal 3). Because none of the proposals to be voted on at the IHS special meeting are routine matters for which brokers may have discretionary authority to vote, IHS does not expect any broker non-votes at the IHS special meeting. If you hold your shares in street name, it is critical that you cast your vote by instructing your bank, broker or other nominee on how to vote if you want your vote to be counted at the IHS special meeting. The NYSE rules governing brokers’ discretionary authority will not permit brokers to exercise discretionary authority regarding any of the proposals to be voted on at the IHS special meeting.

 

51


Table of Contents

If you are an IHS stockholder and you mark your proxy or voting instructions to abstain or fail to instruct your broker or nominee to vote, it will have the effect of a vote “AGAINST” the IHS merger proposal but will have no effect on the IHS compensation proposal or the IHS adjournment proposal, assuming a quorum is present.

How to Vote

By Telephone—IHS stockholders can vote their shares via a toll-free telephone number by following the instructions provided on the enclosed proxy card. The telephone voting procedures are designed to authenticate a stockholder’s identity to allow stockholders to vote their shares and confirm that their instructions have been properly recorded. Voting by telephone authorizes the named proxies to vote your shares in the same manner as if you had submitted a validly executed proxy card.

By Mail—IHS stockholders may vote their shares by signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided with this joint proxy statement/prospectus. Proxy cards submitted by mail must be received by the time of the IHS special meeting for your shares to be voted.

At the IHS Special Meeting—Only IHS stockholders and invited guests may attend the IHS special meeting. You will need to bring picture identification to the meeting. If you own shares in street name (i.e., your shares are held in street name through a broker, bank, trustee or other nominee), please bring your most recent brokerage statement, along with picture identification, to the meeting. IHS will use your brokerage statement to verify your ownership of IHS common stock and admit you to the meeting. Shares held in your name as the stockholder of record may be voted by you in person at the IHS special meeting. Shares held beneficially in street name may be voted by you in person at the IHS special meeting only if you obtain a legal proxy from the broker or other agent that holds your shares giving you the right to vote the shares and bring such proxy to the IHS special meeting. If you vote by proxy and also attend the IHS special meeting, you do not need to vote again at the IHS special meeting unless you wish to change your vote. Even if you plan to attend the IHS special meeting, we strongly urge you to vote in advance by proxy by signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided or by voting by telephone by following the instructions provided on the enclosed proxy card and below.

Voting of IHS Shares Held in Street Name

If your brokerage firm, bank, broker-dealer or other similar organization is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from the holder of record as detailed on the enclosed voting instructions form. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will not be able to vote your shares with respect to the approval of the IHS merger proposal (Proposal 1), the vote on the IHS compensation proposal (Proposal 2) or the vote on the IHS adjournment proposal (Proposal 3). We urge you to instruct your broker or other nominee how to vote your shares by following those instructions.

Voting of Proxies

If you vote by telephone or by signing, dating and returning a proxy card, we will vote your shares as you direct. If you submit a proxy to IHS without indicating instructions with respect to specific proposals, we will vote your shares consistent with the recommendations of the IHS board as stated in this joint proxy statement/prospectus, specifically for approval of the IHS merger proposal, in favor of the advisory vote on the IHS compensation proposal and in favor of the IHS adjournment proposal.

Revocability of Proxies and Changes to an IHS Stockholder’s Vote

You can change your vote or revoke your proxy at any time before it is exercised at the IHS special meeting by doing any of the following: (1) you can submit a valid proxy with a later date; (2) you can notify IHS’s

 

52


Table of Contents

Secretary in writing, at Secretary, IHS Inc., 15 Inverness Way East, Englewood, CO 80112, that you have revoked your proxy; (3) you can call the telephone number specified on your proxy card, following the instructions on your proxy card and to the extent you are eligible to do so; or (4) you can vote in person by written ballot at the IHS special meeting.

Your attendance alone will not revoke any proxy.

Written notices of revocation and other communications about revoking IHS proxies should be addressed to:

IHS Inc.

15 Inverness Way East

Englewood, CO 80112

Attn: Stephen Green, Corporate Secretary

If your IHS shares are held in street name, you should follow the instructions of your broker regarding the revocation of proxies.

Once voting on a particular matter is completed at the IHS special meeting, an IHS stockholder will not be able to revoke its proxy or change its vote as to that matter.

Tabulation of Votes

The IHS board has appointed representatives of American Stock Transfer & Trust Company, LLC to serve as the inspector of election for the IHS special meeting. The inspector of election will, among other matters, determine the number of shares of IHS common stock represented at the IHS special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to the IHS stockholders.

How to Attend the IHS special meeting

Registered stockholders may be admitted to the IHS special meeting upon providing picture identification. If you own shares in street name (i.e., your shares are held in street name through a broker, bank, trustee or other nominee), please bring your most recent brokerage statement, along with picture identification, to the IHS special meeting. We will use your brokerage statement to verify your ownership of IHS common stock and admit you to the IHS special meeting.

Please note that cameras, sound or video recording equipment, or other similar equipment, electronic devices, large bags or packages will not be permitted in the IHS special meeting.

Solicitation of Proxies

IHS is soliciting proxies to provide an opportunity to all IHS stockholders to vote on agenda items, whether or not the stockholders are able to attend the IHS special meeting or an adjournment or postponement thereof. IHS will bear the entire cost of soliciting proxies from its stockholders, except that IHS and Markit have agreed to each pay one half of the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus and all filing and other similar fees payable to the SEC in connection with this joint proxy statement/prospectus. In addition to the solicitation of proxies by mail, IHS will request that banks, brokers and other record holders send proxies and proxy material to the beneficial owners of IHS common stock and secure their voting instructions, if necessary. IHS will reimburse the record holders on request for their reasonable expenses in taking those actions.

IHS has also made arrangements with D.F. King & Co., Inc. to assist in soliciting proxies and in communicating with IHS stockholders and estimates that it will pay them a fee of approximately $15,000 plus

 

53


Table of Contents

out-of-pocket fees and expenses for these services. Proxies also may be solicited on behalf of IHS in person, by mail, by telephone, by electronic communication or by IHS officers and employees, who will not be specially compensated for their services in this regard.

Adjournments

If a quorum is not present or represented, a meeting of IHS stockholders may be adjourned by the Chairman, to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.

If a quorum is present at the IHS special meeting but there are not sufficient votes at the time of the IHS special meeting to approve the IHS merger proposal, then IHS stockholders may be asked to vote on the IHS adjournment proposal. No notices of an adjourned meeting need be given if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, unless the IHS board sets a new record date for such meeting, in which case a notice of the adjourned meeting will be given to each IHS stockholder of record entitled to vote at the meeting. At any subsequent reconvening of the IHS special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the IHS special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you have any questions or need assistance in voting your shares, please call D.F. King & Co., Inc., the firm assisting IHS in the solicitation. IHS stockholders in the U.S., Canada, and internationally, may call (866) 416-0553 or, alternatively, (201) 806-7301. Banks and brokers may call collect at (212) 493-3910.

 

54


Table of Contents

THE MERGER AGREEMENT

Effects of the Merger

At the effective time, Merger Sub will be merged with and into IHS, with IHS surviving the merger as an indirect and wholly owned subsidiary of Markit.

Subject to the terms and conditions set forth in the merger agreement, IHS stockholders will have the right to receive, with respect to each share of IHS common stock they hold at the effective time, 3.5566 Markit common shares, with cash paid in lieu of fractional Markit common shares based on then prevailing market prices. In addition, each share of common stock of Merger Sub, par value $0.01 per share, issued and outstanding immediately prior to the effective time will be cancelled and, in exchange for the cancellation and the funding of the merger consideration by Markit, IHS, as the surviving corporation in the merger will issue an equivalent number of fully paid and non-assessable shares of common stock, par value $0.01 per share, all of which shares will be held by a subsidiary of Markit, and which will constitute the only outstanding shares of common stock of IHS, as the surviving corporation, immediately following the effective time.

The merger agreement provides that the merger consideration will be adjusted appropriately to reflect the effect of any stock split, reverse stock split, share consolidation, share subdivision, share bonus issue or stock dividend (including any dividend or distribution of securities convertible into the IHS common stock or Markit common shares, as applicable), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of shares of IHS common stock or Markit common shares issued and outstanding after the date hereof and prior to the effective time. However, the merger agreement does not contain any provision that would adjust the exchange ratio based on fluctuations in the market value of either company’s common stock. Because of this, the implied value of consideration to the IHS stockholders may fluctuate between now and the completion of the merger. The value of the consideration to IHS stockholders will depend on the market value of Markit common shares at the time the merger is completed.

Background of the Merger

The management and board of directors of each of IHS and Markit regularly review and discuss the performance, risks, strategy and competitive position of their respective companies, as well as opportunities available to their respective companies. In addition, the management and board of directors of each of IHS and Markit regularly review and evaluate the possibility of pursuing various strategic alternatives and relationships as part of their respective companies’ ongoing efforts to strengthen their respective overall business and enhance value for their respective shareholders or stockholders, as applicable, taking into account economic, regulatory, competitive and other conditions.

In November 2015, Mr. William E. Ford, Chief Executive Officer and Managing Director of General Atlantic and a member of the Markit board, suggested to both Mr. Jerre Stead, Chief Executive Officer and Chairman of IHS, and Mr. Lance Uggla, Chief Executive Officer and Chairman of Markit, on separate occasions, that they may want to meet to discuss partnering together on commercial opportunities. As the chief executive officers of similarly situated companies, Messrs. Stead and Uggla were familiar with each other and had previously on occasion discussed via telephone the respective businesses of IHS and Markit and the industries in which those businesses operate.

As part of the Markit board’s regular review, at a board meeting held on December 3, 2015, at the Markit board’s invitation, J.P. Morgan made a presentation relating to potential strategic alternatives, including potential transactions with various counterparties in the industries in which Markit operates, including IHS.

On December 4, 2015, Messrs. Stead, Uggla and Ford met in New York to discuss various potential commercial opportunities between IHS and Markit, including Markit utilizing IHS content sets and the use of

 

55


Table of Contents

Markit solutions’ and managed services products by clients of IHS. Following the meeting, Messrs. Stead and Uggla spoke a number of times with each other, as well as with Mr. Ford, via telephone between December 9, 2015 and December 18, 2015 about potential opportunities for their respective companies. As part of these discussions, during a call between Messrs. Stead and Uggla during the week of December 9, 2015, the topic of a potential business combination between IHS and Markit was discussed. Mr. Stead and Mr. Uggla both indicated that they believed a business combination could provide significant benefits to both IHS stockholders and Markit shareholders, as well as customers of their respective companies, and they agreed that it would be worthwhile to explore a potential combination. In furtherance of these discussions, and in order to permit the exchange of confidential information, Messrs. Stead and Uggla agreed that their respective companies should enter into a mutual confidentiality agreement.

On December 19, 2015, Mr. Stead spoke with representatives of M. Klein regarding the possibility of engaging M. Klein as a financial advisor in connection with the potential combination. Mr. Stead reached out to M. Klein due to M. Klein’s familiarity with IHS as a result of prior engagements, and their expertise in the industry. Following this discussion, M. Klein began advising IHS, and was subsequently engaged on February 26, 2016 as a financial advisor to IHS with respect to the potential combination.

Also on December 19, 2015, Mr. Jeff Gooch, Chief Financial Officer of Markit, and Mr. Todd Hyatt, Executive Vice President and Chief Financial Officer of IHS, were introduced to each other by Messrs. Uggla and Stead via email.

On December 20, 2015, Mr. Uggla spoke with representatives of J.P. Morgan regarding the possible engagement of J.P. Morgan as a financial advisor in connection with the potential combination. Following this discussion, J.P. Morgan began advising Markit on the potential combination. Pursuant to an engagement letter dated March 17, 2016 and effective as of November 9, 2015, Markit and J.P. Morgan confirmed J.P. Morgan’s engagement as Markit’s financial advisor with respect to the potential combination. From December 20, 2015 to January 4, 2016, members of Markit management discussed its high-level views on potential areas of revenue synergy and cost synergy and the strategic rationale for the potential combination with J.P. Morgan.

On December 24, 2015, IHS and Markit entered into a mutual confidentiality agreement.

During December, 2015 and January, 2016, Mr. Uggla had conversations with Mr. Ford, Mr. Robert Kelly, lead director of the Markit board and chair of Markit’s human resources and compensation committee, which we refer to as the Markit HRCC, and, beginning on December 11, 2015, certain other members of the Markit board, regarding his discussions with Mr. Stead and the potential combination with IHS. As part of these discussions, Mr. Uggla and Mr. Kelly spoke via telephone and agreed that Mr. Kelly and Mr. Stead should meet in person.

At the start of January, 2016, Messrs. Stead and Uggla discussed arranging a meeting of the IHS and Markit management teams and their respective financial advisors to continue exploring a potential combination of the companies.

On January 4, 2016, representatives of M. Klein and J.P. Morgan met in New York to discuss, on a preliminary basis, a potential combination transaction between IHS and Markit. Between January 4, 2016 and February 4, 2016, at the direction of the respective management teams of IHS and Markit, M. Klein and J.P. Morgan held a number of telephonic meetings to discuss a potential combination.

On January 8, 2016, Messrs. Gooch and Hyatt held discussions by telephone regarding the respective businesses and corporate information of Markit and IHS.

On January 15, 2016, Messrs. Gooch and Hyatt discussed on a telephone call various matters related to the potential combination, including the potential structure and certain synergies of the potential combination. Messrs. Gooch and Hyatt also discussed next steps regarding a potential combination and the importance of a face to face meeting between the respective managements of Markit and IHS.

 

56


Table of Contents

On February 4, 2016, the Markit board held a regularly scheduled telephonic meeting. At the meeting, Mr. Uggla updated the Markit board on various matters, including Markit management’s evaluation of the potential combination with IHS. At the conclusion of the meeting, the Markit board directed Markit management and its advisors to continue engaging in discussions with IHS regarding the potential combination.

On February 5, 2016 and February 6, 2016, IHS’s and Markit’s respective management teams and financial advisors met in Miami, Florida to continue discussing a potential business combination between IHS and Markit, including an overview of both businesses, developing a plan for due diligence review and evaluation of potential synergies which might be realized as a result of such combination. The IHS attendees were Mr. Stead, Mr. Hyatt and Mr. Stephen Green, Executive Vice President, Legal and Corporate Secretary of IHS, and the Markit attendees were Mr. Uggla, Ms. Sari Granat, General Counsel of Markit, Mr. Gooch and Mr. Stephen Wolff, Head of Group Corporate Strategy of Markit. During the course of those meetings, on February 6, 2016, Mr. Kelly met with Mr. Stead to discuss the potential combination and Mr. Stead’s vision for the combined company.

On February 7, 2016, Mr. Stead called an IHS director with experience in the finance industry, Deborah McWhinney, to discuss her knowledge of Markit in the context of a potential transaction.

From February 8, 2016 to February 23, 2016, representatives from each of IHS management, Markit management, M. Klein and J.P. Morgan participated in a series of calls to discuss the potential combination, including among other things, structural considerations and IHS’s and Markit’s management’s forecasts of the potential synergies, including cost synergies and revenue synergies, that could be realized in the proposed combination. On February 12, 2016, representatives from each of IHS management, Markit management, M. Klein and J.P. Morgan participated in a telephone call led by Mr. Gooch and Mr. Hyatt to discuss IHS’s and Markit’s management’s views regarding the cost synergy potential.

During the week of February 8, 2016, and in preparation for a meeting of the Markit board to be held on February 18, 2016, Mr. Uggla and Mr. Kelly held discussions with various individual members of Markit’s board regarding the potential combination with IHS.

On February 12, 2016, Mr. Stead shared a proposed deal timeline with Mr. Uggla.

On February 16, 2016, Mr. Stead sent to Mr. Uggla a draft summary setting forth certain key terms of a proposed “merger of equals” between IHS and Markit, including terms relating to closing certainty and deal protections and a proposed governance framework and CEO/Chairman succession plan for the combined company.

On February 17, 2016, Mr. Ford and Mr. Stead discussed the potential combination via telephone.

On February 18, 2016, the Markit board held a special meeting by telephone to discuss the potential combination with IHS. Prior to the meeting, the Markit board received materials on the proposed combination that were prepared by Markit management, J.P. Morgan and Davis Polk & Wardwell LLP, legal advisor to Markit, referred to as Davis Polk. At the meeting, which was attended by Markit management and representatives of J.P. Morgan and Davis Polk, Markit management presented their evaluation of the potential combination and representatives of J.P. Morgan presented preliminary financial analyses relating to the potential combination. Representatives of Davis Polk then reviewed with the Markit board, based on the advice of Conyers Dill & Pearman Limited, Markit’s special Bermuda counsel, which we refer to as Conyers, the fiduciary duties of the Markit board in connection with the potential combination. The Markit board then discussed the merits and risks of the proposed transaction, as well as the merits and risks of remaining a standalone company and executing on Markit’s existing operating plan or of pursuing other strategic transactions reasonably available to Markit. At the conclusion of the meeting, the Markit board directed Markit management and its advisors to continue engaging in discussions with IHS regarding the potential combination.

 

57


Table of Contents

On February 21, 2016, Mr. Stead sent a further revised draft of the summary to Mr. Uggla, which reflected, among other things, certain changes to the structure of the potential combination.

On February 21 and 23, 2016, Markit entered into mutual confidentiality agreements regarding the potential combination with two of its key shareholders, Canada Pension Plan, which we refer to as CPPIB, and Temasek, respectively. Mr. Uggla and CPPIB held initial discussions on February 22, 2016 and continued such discussions thereafter from February 26, 2016 to explain and hear CPPIB’s view of the potential combination. Mr. Uggla and Temasek held discussions from March 9, 2016 and continued such discussions thereafter to explain and hear Temasek’s view of the potential combination.

On February 24, 2016, the IHS board convened a special telephonic meeting to discuss a potential combination with Markit. Mr. Green, Mr. Hyatt, and representatives from each of IHS management, M. Klein and Weil, Gotshal & Manges LLP, legal advisor to IHS, referred to as Weil, participated in the meeting. Prior to such meeting, the IHS board received materials on the proposed combination that were prepared by Weil and incorporated material prepared by M. Klein. Mr. Stead briefed the board regarding the preliminary discussions with Markit regarding a potential combination with Markit and the strategic rationale for the combination. A representative of Weil provided an overview of the fiduciary duties of directors, including in connection with a review of the potential combination. The IHS board, along with representatives from M. Klein and Weil, discussed the strategic rationale for a potential combination with Markit and reported on the status of the work of the collective management and advisory teams regarding potential synergies that could result from the proposed combination. Representatives of IHS management then provided the IHS board with an overview of the business and legal due diligence performed to date.

Following the February 24, 2016 IHS board meeting, IHS determined to seek an additional independent third party perspective on Markit’s market positions in its key products areas. At IHS’s request, representatives of M. Klein facilitated discussions with two nationally recognized consulting firms. Due to their level of expertise in the relevant financial services sectors, Boston Consulting Group, referred to as BCG, was selected for the assignment. Representatives of BCG and M. Klein, in consultation with IHS management, had several follow up meetings and/or calls between March 11, 2016 and March 17, 2016 regarding the assignment and to review BCG’s findings. IHS management met with BCG on March 18, 2016 to fully discuss their findings.

On February 26, 2016 and February 27, 2016, Mr. Stead and Mr. Uggla met to continue discussing the potential combination, including progress of due diligence, potential synergies and governance of a combined business.

From February 26, 2016 through March, 2016, representatives of IHS, M. Klein and Weil and representatives of Markit, J.P. Morgan and Davis Polk, participated in due diligence calls covering various aspects of the businesses of IHS and Markit, including IHS’s and Markit’s management’s forecasts of potential synergies arising from a combination. After March 1, 2016, Goldman Sachs also participated in all due diligence calls as a financial advisor to IHS.

On February 27, 2016 and February 28, 2016, representatives from IHS, including Messrs. Stead and Hyatt, and representatives from Markit, including Messrs. Uggla and Gooch, as well as key business lines leaders from both IHS and Markit, met in Scottsdale, Arizona to discuss the potential combination. Over the course of the two days, the two companies’ business lines leaders provided overviews of their respective businesses and discussed in depth potential revenue synergies that could arise from the combination. Prior to the February 27, 2016 meeting, management of Markit and IHS shared information about their respective businesses and products.

On February 29, 2016, Ms. Granat and representatives of Davis Polk, participated in a call with Mr. Kelly and Mr. Timothy Frost, a director of Markit and chair of Markit’s nominating and governance committee, regarding the proposed combination, including the proposed governance framework of the combined company. Over the next three weeks, members of Markit management and representatives of Davis Polk continued to provide updates to Messrs. Kelly and Frost, as well as other members of the Markit board, regarding the status of discussions.

 

58


Table of Contents

On March 1, 2016, representatives of Davis Polk, at the direction of Markit, sent to Weil a draft of the amended and restated Markit bye-laws, which provided for certain governance terms of the combined company, including a CEO/Chairman succession plan pursuant to which (i) Mr. Stead would serve as CEO and Chairman, and Mr. Uggla would serve as President, of the combined company through the end of 2017 and (ii) Mr. Uggla would assume the role of CEO and Chairman of the combined company on January 1, 2018. On March 2, 2016, representatives of Weil, at the direction of IHS, sent a draft merger agreement to Davis Polk. The draft agreement provided, among other things, that the merger consideration would consist solely of Markit common shares, included reciprocal representations and warranties and covenants and equal termination fees, contemplated a “force-the-vote” provision prohibiting either party from terminating the merger agreement to enter into an alternative transaction, included a footnote contemplating an exchange ratio that would result in IHS stockholders owning approximately 59% of the combined company and Markit shareholders owning approximately 41% of the combined company immediately following the transaction, which was the approximate ownership implied by IHS’s and Markit’s respective market capitalizations at the time, and included customary restrictions on IHS’s and Markit’s respective ability to take certain actions during the period between signing and closing.

Following consideration by the IHS board and Mr. Stead of the benefits of adding an additional financial advisor, on March 1, 2016, Mr. Stead spoke with representatives of Goldman Sachs regarding the possibility of engaging Goldman Sachs as a financial advisor in connection with the proposed combination. Following this discussion, Goldman Sachs began advising, and was subsequently engaged on March 14, 2016, as an additional financial advisor to the IHS board with respect to the proposed combination.

On March 2, 2016, IHS’s Audit Committee held a meeting by telephone to discuss a proposed combination.

During the period between March 3, 2016 and March 20, 2016, representatives of IHS and Weil, on the one hand, and representatives of Markit and Davis Polk, on the other hand, exchanged numerous drafts of the merger agreement and amended and restated Markit bye-laws and engaged in negotiations regarding the terms and conditions of the merger agreement and the amended and restated Markit bye-laws. During this period, IHS, Markit and their respective advisors continued their respective due diligence reviews.

On March 3, 2016, the Markit board held a special meeting by telephone to discuss the potential combination with IHS. Prior to the meeting, the Markit board received materials relating to the proposed combination that were prepared by Markit management, J.P. Morgan and Davis Polk. At that meeting, which was attended by Markit management and representatives of J.P. Morgan and Davis Polk, Markit management presented an update on the status of the potential combination, which included an update on the diligence process for the potential combination and diligence findings to date relating to IHS, as well as the potential synergies expected to result from the transaction. Also at the meeting, representatives of J.P. Morgan presented to the Markit board preliminary financial analyses relating to the potential combination. Representatives of Davis Polk then presented to the Markit board the key terms of the potential combination, including the key terms and the remaining open deal terms of the draft merger agreement provided by IHS’s counsel on March 2, 2016, and reviewed with the Markit board, based on the advice of Conyers, the fiduciary duties of the Markit board in connection with the potential combination. The Markit board then discussed the open deal terms and the merits and risks of the proposed transaction, as well as the merits and risks of remaining a standalone company and executing on Markit’s existing operating plan or of pursuing other strategic transactions reasonably available to Markit. At the conclusion of the meeting, the Markit board directed Markit management and its advisors to continue engaging in discussions with IHS regarding the potential combination.

Also on March 3, 2016, the IHS board convened a telephonic meeting during which representatives of IHS management, Weil and M. Klein provided the IHS board with an update on the discussions with Markit, including an update on the structure of the transaction and proposed organizational structure of the combined company, key transaction terms, financial considerations, key due diligence findings and risks and other considerations.

 

59


Table of Contents

During the period between March 5, 2016 to March 13, 2016, each of the IHS directors met with Mr. Uggla in person or by telephone, in order to better understand Mr. Uggla’s future plans and visions for the combined company as a continuing executive and successor to the positions of Chief Executive Officer and Chairman of the combined company.

On March 8, 2016, IHS’s Audit Committee convened a special telephonic meeting to review the proposed combination. Members of IHS management and representatives from Weil were in attendance. The IHS Audit Committee received an update on the tax and capital structure of the transaction and progress of accounting and financial diligence, as well as an overview of the accounting and reporting considerations for the proposed combination. Following such update, the members of the IHS Audit Committee discussed with IHS management and representatives from Weil such tax and accounting matters and the impact on the potential proposed combination.

On March 8, 2016, Davis Polk provided Weil with revisions to the draft merger agreement. Among other things, their comments contemplated that the Markit amended bye-laws approval and the Markit name change approval would be conditions to closing, that the termination fee would be equal to a percentage of each party’s respective market value and noted that the proposed ownership split for the combined company would be subject to further discussion and negotiation between the parties. On March 9, 2016, Weil sent Davis Polk comments on the draft merger agreement. Over the next several days, representatives of Davis Polk and Weil continued to exchange drafts of the merger agreement and negotiate its terms. The due diligence review by each of Markit and IHS and their respective advisors continued.

On March 9-10, 2016, Markit held a regularly scheduled board meeting in London, England. Prior to the meeting, the Markit board received materials on the proposed combination that were prepared by Markit management, J.P. Morgan and Davis Polk. At the meeting on March 9, which was attended by Markit management and representatives of Davis Polk and J.P. Morgan, Markit management provided an update on the potential combination with IHS, including the strategic rationale for the transaction, the long term objectives for the combined company, the capital structure of the combined company and the synergies expected to result from the transaction. The Markit board then dismissed all members of management and advisors and met with Mr. Stead by video conference to discuss the potential combination, including Mr. Stead’s vision for the combined company. Members of Markit management and Markit’s advisors rejoined the meeting following the video conference with Mr. Stead and representatives of Davis Polk reviewed with the Markit board, based on the advice of Markit’s special Bermuda counsel, the Markit board’s fiduciary duties in connection with the potential combination.

At the March 9, 2016 meeting, representatives of Davis Polk also provided the Markit board with a detailed summary of the proposed terms of the merger agreement and the Markit amended bye-laws, including the proposed structure of the merger, the closing conditions, the deal protections, the governance framework for the combined company and the CEO/Chairman succession plan, and provided an overview of the open deal terms remaining to be negotiated. The Markit board discussed the proposed terms of the merger agreement and the Markit amended bye-laws and the open deal terms remaining to be negotiated. Representatives of J.P. Morgan then provided updated preliminary financial analyses relating to the potential combination and reviewed the presentation circulated to the Markit board. The Markit board discussed with Markit management and J.P. Morgan the preliminary financial analyses presented by J.P. Morgan, as well as Markit’s performance and general market conditions for the first quarter of 2016 to date, and the Markit board noted that, if early first quarter 2016 sales levels or general market conditions were to continue in the future, Markit could fail to achieve the Markit management forecasts. Accordingly, the Markit board directed Markit management to prepare certain alternative projection scenarios, as described below under “Certain Markit Forecasts”. Representatives of J.P. Morgan then reviewed the analytics of the proposed combined company and provided an analysis of the implied pro forma ownership for current Markit shareholders in the combined company, at various exchange ratios based on certain of J.P. Morgan’s financial analyses. The Markit board discussed J.P. Morgan’s presentation.

 

60


Table of Contents

Also on March 9, 2016, Markit’s audit and risk committee, which we refer to as the Markit ARC, held a meeting in London, England, which was attended by Markit management and by representatives of Davis Polk, PricewaterhouseCoopers LLP (in their capacity as auditors of Markit) and Deloitte. At the meeting, the Markit ARC reviewed and approved Markit’s annual audited financial statements and Markit’s annual report on Form 20-F for the year ended December 31, 2015. The Markit ARC also discussed the potential combination with IHS, including the tax structure of the transaction and an analysis under Section 7874 of the Code.

On March 10, 2016, at the continuation of the Markit March 9, 2016 board meeting, Markit management continued their discussion of the proposed transaction, including a discussion of whether the combined company would retain Markit’s foreign private issuer status. Markit management also discussed the actions that would be necessary to ensure that the combined company would remain tax resident in the United Kingdom. Representatives of Davis Polk presented to the Markit board an overview of the tax analysis of the proposed transaction structure. The Markit board then discussed the potential loss of Markit’s foreign private issuer status and the tax analysis for the proposed transaction structure. Also at the March 10, 2016 meeting, the Markit board reviewed information provided by J.P. Morgan with respect to its historical business relationships with IHS, which matters are described below under “—Opinion of Markit’s Financial Advisors”, and approved the engagement of J.P. Morgan to act as Markit’s financial advisor in connection with the potential combination with IHS.

At the March 10, 2016 Markit board meeting, Markit management presented an update on the commercial and legal diligence for the potential combination. Markit management also presented to the Markit board the proposed execution timeline for the transaction, noting the intention to announce the transaction on March 21, 2016 if the transaction were approved by the boards of both Markit and IHS. The Markit board discussed the proposed timeline and the strategy for any announcement of the transaction. Representatives of J.P. Morgan presented updated preliminary financial analyses relating to the potential transaction to the Markit board.

The Markit board then discussed the merits and risks of the proposed transaction, as well as the merits and risks of remaining a standalone company and executing on Markit’s existing operating plan or of pursuing other strategic transactions reasonably available to Markit. At the conclusion of the meeting, the Markit board directed Markit management and its advisors to continue engaging in discussions with IHS regarding the potential combination with the aim of negotiating the most favorable available terms for Markit and its shareholders.

Also on March 10, 2016, the Markit HRCC held a meeting in London, England, which was attended by Markit management and by representatives of Davis Polk. At that meeting, Markit management presented to the Markit HRCC an overview of the proposed treatment of executives at both Markit and IHS in the potential combination. The Markit HRCC discussed the presentation relating to equity awards and severance and, after discussion, approved certain amendments to be made to the Company’s KEIP and 2014 Equity Incentive Plan in connection with the transaction. Markit management then provided an overview of the treatment of Mr. Uggla’s employment agreement and equity award terms in connection with the potential transaction structure in light of the proposed CEO/Chairman succession plan. The Markit HRCC discussed the compensation and equity award terms of Mr. Uggla and the treatment of such terms under the potential transaction structure, and unanimously agreed to adopt certain changes to his compensation structure as proposed and as described under “Interests of Markit Directors and Executive Officers in the Merger”.

Also on March 10, 2016, the IHS board convened a special telephonic meeting to review the transaction. Members of IHS management and representatives from each of M. Klein, Goldman Sachs and Weil also participated in the meeting. The IHS board received an update on the discussions regarding the potential combination, as well as the call Mr. Stead had with Markit’s directors, at their request, to discuss the potential combination and value creation opportunities for the shareholders and stockholders of both companies as well as their respective customers. Representatives from Weil provided an update on the transaction structure and the key terms of the draft merger agreement and the issues being negotiated by the parties, as well as discussing the benefits and risks of the proposed transaction. Representatives from M. Klein provided an overview of the

 

61


Table of Contents

transaction to the IHS board. Members of IHS management also provided a due diligence update to the IHS board. The IHS board discussed the progress of the negotiations, and the terms of the proposed transaction and questioned management and its advisors regarding the financial and legal impact of the proposed terms and conditions. Thereafter, the directors excused members of IHS management and its advisors and continued to discuss the proposed combination in executive session.

On March 12, 2016 and March 16, 2016, IHS’s HR Committee convened special telephonic meetings to discuss the status of certain employee related items in connection with the proposed combination, including, among other things, the treatment of equity performance share units in connection with the proposed combination. Representatives of IHS management and Weil were also in attendance.

On March 15, 2016, representatives of J.P. Morgan spoke with representatives of M. Klein regarding the open issues in the merger agreement, including the exchange ratio and resulting pro forma ownership of the combined company by Markit shareholders and IHS stockholders. Separately, on that same day, Messrs. Uggla and Stead also discussed the exchange ratio and resulting pro forma ownership of the combined company, and Mr. Stead suggested an exchange ratio of 3.65 Markit common shares for each share of IHS common stock, which would result in IHS stockholders and Markit shareholders owning approximately 57.3% and approximately 42.7%, respectively, of the combined company.

On March 15, 2016 Bala Iyer, a member of the IHS board, had discussions with Dinyar Devitre, a member of the Markit board and Chair of Markit’s Audit and Risk Committee regarding certain tax aspects of the potential combination, including the analysis under section 7874 of the Code. Representatives of Weil, Davis Polk, Deloitte, J.P. Morgan and members of management of IHS and Markit attended such discussions.

On March 17, 2016, Mr. Stead and Mr. Uggla discussed the exchange ratio via telephone and agreed that they would propose to the boards of directors of their respective companies an exchange ratio that would result in IHS stockholders and Markit shareholders owning approximately 57% and 43%, respectively, of the combined company on a fully diluted basis, which, based on the respective companies’ fully diluted share counts as of March 16, 2016, implied an exchange ratio of 3.5566 Markit common shares for each share of IHS common stock.

Also on March 17, 2016, Markit’s board held a special meeting by telephone, which was attended by Markit management and by representatives of J.P. Morgan and Davis Polk. At that meeting, representatives of Davis Polk presented to the board an update on the key transaction terms, including an overview of the key transaction terms that remained to be negotiated. Representatives of Davis Polk also presented to the Markit board an update on the tax analysis of the proposed transaction structure. The Markit board discussed the key transaction terms and the tax analysis of the potential combination.

Also at the March 17, 2016 Markit board meeting, representatives of J.P. Morgan provided the Markit board with updated preliminary financial analyses relating to the potential combination based on a proposed exchange ratio of 3.5566 of Markit common shares per share of IHS common stock. The Markit board then discussed J.P. Morgan’s financial analyses, which reflected the three projections scenarios included in the Markit management forecasts as described below under “Certain Markit Forecasts”.

Davis Polk sent Weil a revised draft of the merger agreement on the evening of March 18, 2016 and over the next two days Davis Polk and Weil and their respective clients, worked to resolve the remaining open items in the draft merger agreement and the other transaction documents.

On the morning of March 19, 2016, the Markit board held a special meeting in London, England. Prior to the meeting, the Markit board received materials on the proposed combination that were prepared by Markit management, J.P. Morgan and Davis Polk. At the meeting, which was attended by representatives of J.P. Morgan and Davis Polk, Markit management provided the Markit board with an update of management’s completed

 

62


Table of Contents

diligence on the potential combination with IHS. Representatives of Davis Polk then presented to the Markit board the final terms of the potential combination, including the final terms of the proposed governance framework and the CEO/Chairman succession plan of the combined company, including that five members of the combined company board, including the lead director, would be former Markit directors. The Markit board discussed the final transaction terms and governance structure. The Markit board also discussed certain social issues relating to the potential combination, including the name and headquarters of the combined company.

Representatives of J.P. Morgan then presented the Markit board with its financial analyses relating to the potential combination based on the final transaction terms. J.P. Morgan then rendered its opinion, subsequently confirmed in writing, to the Markit board that, as of the date of its opinion and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio of 3.5566 Markit common shares for each share of IHS common stock in the merger was fair, from a financial point of view, to Markit. The Markit board discussed J.P. Morgan’s presentation and the fairness opinion presented by J.P. Morgan on the potential combination.

Following these discussions, at the March 19, 2016 meeting, the Markit board discussed the merits and risks of the proposed transaction, and the directors unanimously determined that it was advisable for, fair to and in the best interests of Markit to enter into the merger agreement, substantially in the form presented, and to consummate the merger and the other transactions contemplated thereby, and unanimously approved the merger and the merger agreement. Also at the March 19, 2016 meeting, the Markit board unanimously determined that it is advisable and in the best interests of Markit to adopt an amendment to its 2014 Equity Incentive Plan and the amendment to Mr. Uggla’s compensation structure as described under “Interests of Markit Directors and Executive Officers in the Merger”.

On the same date, the IHS board held an in-person meeting at Weil’s offices in New York. The IHS board was joined at the meeting by representatives of IHS management, as well as representatives from M. Klein, BCG, Goldman Sachs and Weil. Mr. Stead described the purpose of the meeting and provided the IHS board with an overview of the proposed combination and the value creation opportunities for a combined company. A representative from BCG then reviewed for the IHS board its analysis of the industry in which Markit operates made in connection with the proposed combination and answered questions from the IHS board regarding its analysis. After such presentation the representative from BCG was excused from the meeting. A representative from Weil reviewed with the IHS board their fiduciary duties in connection with evaluating the proposed combination and presented a summary of the material terms of the merger agreement. Representatives of IHS management and Weil also updated the IHS board on due diligence and risks and other considerations related to the proposed combination. A question and answer session followed, during which the IHS board discussed the matters presented and asked questions of IHS management and representatives of Weil. The IHS board then excused IHS management and the IHS board’s advisors from the meeting and continued its evaluation and discussion of the proposed combination in executive session. Following such executive session, IHS management and representatives from M. Klein, Goldman Sachs and Weil re-entered the meeting. Representatives of M. Klein reviewed for the IHS board an overview of the transaction. Following such discussion, representatives from Goldman Sachs reviewed their financial analysis of the proposed combination. The IHS board then engaged in further discussions of the proposed combination and asked questions of the IHS management and representatives of M. Klein and Goldman. Following such discussions, Goldman Sachs rendered to the IHS board its oral opinion, confirmed by delivery of a written opinion dated March 20, 2016, to the effect that as of that date, and based upon and subject to the various assumptions, matters considered and limitations and qualifications described in its opinion, the Exchange Ratio was fair, from a financial point of view, to the stockholders of IHS (other than Markit and its affiliates). After discussion, the IHS board unanimously determined that it was advisable and in the best interests of IHS to enter into the merger agreement and the transactions contemplated by the merger agreement, and the board unanimously approved the merger agreement and the transactions contemplated by the merger agreement.

 

63


Table of Contents

On March 19, 2016, the IHS board and certain members of the Markit board met for dinner in New York City.

On March 20, 2016, representatives of IHS and Markit met at IHS’s offices to finalize negotiations of the merger agreement and related documentation and discuss potential post-signing investor and employee communications in connection with the proposed combination. Later in the day on March 20, 2016, the merger agreement was finalized and was executed and delivered by IHS, Markit and Merger Sub.

On the morning of March 21, 2016, prior to market opening, IHS and Markit issued a joint press release announcing the execution of the merger agreement.

Markit’s Reasons for the Merger; Recommendation of the Markit Board

At its meeting on March 19, 2016, the Markit board unanimously approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Markit. The Markit board also unanimously approved, subject to the requisite shareholder approvals, the Markit share issuance, the Markit amended bye-laws and the Markit name change. The Markit board unanimously recommends that the Markit shareholders vote “FOR” each of the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal and the Markit adjournment proposal.

In evaluating the merger agreement, the Markit board consulted with and received the advice of Markit’s management and its legal and financial advisors. In reaching its decision, the Markit board considered a number of factors, including, but not limited to, the following factors which the Markit board viewed as generally supporting its decision to approve the merger agreement and its recommendation that Markit shareholders vote “FOR” the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal.

Strategic Considerations. The Markit board considered that the merger is expected to provide a number of significant strategic opportunities, including the following:

 

    the merger would create a leader in critical information, analytics and solutions, and the combined company will have non-overlapping customers and products, a strong financial profile and a world-class management team, resulting in improved opportunities for growth, cost savings and innovation relative to what Markit could achieve on a stand-alone basis;

 

    IHS and Markit have deep, non-overlapping senior relationships across corporate, government and financial services customers, which will create significant opportunities to offer a more diverse product set to a broader combined customer base;

 

    the merger is expected to result in approximately 20% adjusted diluted EPS growth in 2017 and is expected to have an adjusted effective tax rate in the low- to mid- 20% range;

 

    the combined company will have a capital policy with a target leverage ratio of 2.0 to 3.0 times and execute $1 billion of share repurchases in each of 2017 and 2018, which will provide the combined company with a strong balance sheet with financial flexibility and meaningful capital returns;

 

    the merger will create a global information platform across industries with leading positions in energy, financial services and transportation, resulting in a platform for innovation and new product development to drive future revenue growth;

 

    the merger is expected to be immediately accretive to adjusted diluted earnings per share, with mid-teens accretion in 2018 and the combined company expects to realize cost synergies of $125 million by year-end 2019, which are expected to be driven by integrating corporate functions, reducing technology spending by optimizing IT infrastructure, using centers of excellence in cost-competitive locations and optimizing real estate and other costs;

 

64


Table of Contents
    Markit anticipates the combination will deliver approximately $100 million of run rate revenue opportunities by fiscal year 2019 and that IHS Markit’s subscription-based model will generate approximately 85% in recurring revenues, providing predictability and stability; and

 

    the merger will result in IHS Markit having more than 50,000 customers, including 75% of the Fortune Global 500, creating significant cross-selling opportunities across multiple commercial industries and governments.

Other Factors Considered by the Markit Board. In addition to considering the strategic factors described above, the Markit board considered the following additional factors, all of which it viewed as supporting its decision to approve the merger agreement:

 

    its knowledge of Markit’s business, operations, financial condition, earnings and prospects and of IHS’s business, operations, financial condition, earnings and prospects, taking into account the results of Markit’s due diligence review of IHS;

 

    the current and prospective business climate in the industries in which Markit and IHS operate;

 

    the alternatives reasonably available to Markit, including remaining a stand-alone entity and pursuing other strategic alternatives, and the Markit board’s belief that the merger with IHS created the best reasonably available opportunity to maximize value for Markit shareholders given the potential risks, rewards and uncertainties associated with each alternative and without limiting strategic alternatives that IHS Markit could pursue in the future;

 

    the projected financial results of Markit as a stand-alone company and the fit of the transaction with Markit’s previously established strategic goals;

 

    the recommendation of Markit’s senior management in favor of the merger;

 

    the fact that five members of the 11-member IHS Markit board will be comprised of members designated by Markit;

 

    the fact that Mr. Uggla will be President and a member of the IHS Markit board and will assume the role of Chairman of the IHS Markit board and Chief Executive Officer of IHS Markit upon Mr. Stead’s transition on December 31, 2017;

 

    the fact that Markit and IHS have agreed to cooperate and take all action as is necessary to cause, effective as of the effective time, each committee of the IHS Markit board to be comprised of an equal number of directors selected by each of Markit and IHS to serve on the IHS Markit board in accordance with the Markit amended bye-laws;

 

    the fact that the lead director of the combined company will be a Markit designee;

 

    the fact that any change to the governance provision in the Markit amended bye-laws described in the foregoing three bullets would require the affirmative vote of 75% of the members of the IHS Markit board, and the Markit board’s belief that these arrangements would reasonably assure continuity of the management and oversight of IHS Markit following completion of the merger and allow a strong management team drawn from both Markit and IHS to work together to integrate the two companies;

 

    the written opinion of J.P. Morgan, dated March 20, 2016, to the Markit board to the effect that, as of such date and based upon and subject to the factors and assumptions, set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to Markit, as more fully described below under the section entitled “—Opinion of Markit’s Financial Advisor” beginning on page 81;

 

    the terms and conditions of the merger agreement, including the strong commitments by both Markit and IHS to complete the merger;

 

    the Markit board’s view, after consultation with its legal counsel, concerning the likelihood that regulatory approvals and clearances necessary to consummate the merger would be obtained (the waiting period under the HSR Act in connection with the merger was terminated on April 20, 2016, and approval from BKartA was granted on May 2, 2016);

 

65


Table of Contents
    the fact that the merger agreement provides for a fixed exchange ratio that is expected to result in IHS stockholders and Markit shareholders owning approximately 57% and 43%, respectively of IHS Markit immediately following the effective time, calculated based on IHS’s and Markit’s respective fully diluted shares as of the signing date and excluding the EBT shares, and that no adjustment will be made in the merger consideration to be received by IHS’s stockholders in the merger as a result of possible increases or decreases in the trading price of the Markit common shares following the announcement of the merger;

 

    the fact that, because holders of the issued and outstanding Markit common shares as of immediately prior to the merger would hold approximately 43% of the issued and outstanding shares of IHS Markit immediately after completion of the merger, Markit shareholders would have the opportunity to participate in the future performance of the combined company, including the synergies;

 

    the fact that IHS Markit will be headquartered in London;

 

    the anticipated customer, supplier and stakeholder reaction to the merger;

 

    the Markit board’s right to withhold, withdraw or change its recommendation to the Markit shareholders to vote “FOR” the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change proposal if a superior proposal is available, subject to Markit being obligated to pay IHS a termination fee of $195,000,000 in the event IHS terminates the merger agreement prior to the Markit shareholders’ vote on the Markit shareholder proposals or in certain other circumstances in which Markit enters into an alternative transaction agreement within 12 months after the termination of the merger agreement;

 

    the inability of IHS to terminate the merger agreement in connection with the IHS board withholding, withdrawing or changing its recommendation to the IHS stockholders to vote “FOR” the IHS merger proposal, and the ability of Markit to terminate the merger agreement prior to the IHS stockholders meeting and collect a termination fee of $272,000,000 if such change of recommendation occurs;

 

    the fact that Markit has a proven track record of effectively executing and implementing complex transactions; and

 

    the fact that IHS and Markit have a proven track record of successfully integrating acquired business.

The Markit board weighed these advantages and opportunities against a number of other factors identified in its deliberations weighing negatively against the merger, including:

 

    the challenges inherent in the merger of two businesses of the size, geographical diversity and scope of Markit and IHS and the size of the companies relative to each other, including the risk that integration costs may be greater than anticipated and the possible diversion of management attention for an extended period of time;

 

    the difficulties of combining the businesses and workforces of Markit and IHS;

 

    IHS’s right, subject to certain conditions, to respond to and negotiate with respect to certain alternative proposals from third parties made prior to the time IHS stockholders adopt the merger agreement;

 

    the restrictions in the merger agreement on the conduct of each of Markit’s and IHS’s respective businesses during the period between execution of the merger agreement and the consummation of the merger;

 

    the risk that Markit shareholders or IHS stockholders may object to and challenge the merger and take actions that may prevent or delay the consummation of the merger, including to vote down the proposals at the Markit special meeting or IHS special meeting;

 

    the risk that regulatory agencies may object to and challenge the merger or may impose terms and conditions in order to resolve those objections that adversely affect the financial results of IHS Markit; see the section entitled “—Regulatory Approvals” beginning on page 117;

 

66


Table of Contents
    the risk that the pendency of the merger for an extended period of time following the announcement of the execution of the merger agreement could have an adverse impact on Markit or IHS Markit;

 

    the potential for diversion of management and employee attention during the period prior to completion of the merger, and the potential negative effects on Markit’s and, ultimately, IHS Markit’s businesses;

 

    the risk that, despite the efforts of Markit and IHS prior to the consummation of the merger, Markit and IHS may lose key personnel, and the potential resulting negative effects on Markit’s and, ultimately, IHS Markit’s businesses;

 

    the risk of not capturing all the anticipated cost savings and synergies between Markit and IHS and the risk that other anticipated benefits might not be realized;

 

    the risk that a change in applicable law with respect to Section 7874 of the Code or any other US tax law, or official interpretations thereof, could cause IHS Markit to be treated as a domestic corporation for US federal income tax purposes following the consummation of the merger or otherwise adversely affect IHS Markit or its affiliates;

 

    the possibility that IHS Markit might not achieve its projected financial results;

 

    the potential that the fixed exchange ratio under the merger agreement could result in Markit delivering greater value to the IHS stockholders than had been anticipated by Markit should the value of the Markit common shares increase disproportionately from the date of the execution of the merger agreement;

 

    the fact that the merger agreement prohibits each of Markit and IHS from soliciting or engaging in discussions regarding alternative transactions during the pendency of the merger, subject to limited exceptions;

 

    the requirement that Markit pay IHS a $195,000,000 termination fee if the merger agreement is terminated under certain circumstances and the inability of Markit to terminate the merger agreement in connection with a change of recommendation by the Markit board, and the risk that such restrictions and termination fee may discourage third parties that might otherwise have an interest in a business combination with, or acquisition of, Markit from making alternative proposals;

 

    the risk that changes in the regulatory landscape or new industry developments, including changes in consumer preferences, may adversely affect the business benefits anticipated to result from the merger; and

 

    the risks of the type and nature described under “Risk Factors” beginning on page 28 and the matters described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27.

The foregoing discussion of the factors considered by the Markit board is not intended to be exhaustive, but rather includes the principal factors considered by the Markit board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Markit board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and to make its recommendations to Markit shareholders. In addition, individual members of the Markit board may have given differing weights to different factors. The Markit board conducted an overall review of the factors described above, including thorough discussions with Markit’s management and outside legal and financial advisors.

In considering the recommendation of the Markit board to approve the Markit shareholder proposals, Markit shareholders should be aware that Markit’s directors may have interests in the merger that are different from, or in addition to, those of Markit shareholders generally. For additional information, see the section entitled “—Interests of Markit Directors and Executive Officers in the Merger” beginning on page 95.

 

67


Table of Contents

The explanation of the reasoning of the Markit board and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus.

IHS’s Reasons for the Merger; Recommendation of the IHS Board

At its meeting on March 19, 2016, the IHS board unanimously adopted the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of IHS and its stockholders. The IHS board unanimously recommends that the IHS stockholders vote “FOR” each of the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal.

In evaluating the merger agreement, the IHS board consulted with and received the advice of IHS’s senior management and its legal and financial advisors. In reaching its decision, the IHS board considered a number of factors, including, but not limited to, the following factors which the IHS board viewed as generally supporting its decision to adopt and enter into the merger agreement and its recommendation that IHS stockholders vote “FOR” each of the IHS merger proposal, the IHS compensation proposal and the IHS adjournment proposal.

Strategic Considerations

The IHS board considered that the merger will likely provide a number of significant strategic opportunities, including the following:

 

    the merger would create a combined company with a global information platform across industries with leading positions in energy, financial services and transportation and a platform for innovation and new product development to drive future revenue growth, which will result in a more balanced, stable portfolio;

 

    the merger is expected to result in approximately 20% adjusted diluted EPS growth in 2017 and the combined company is expected to realize cost synergies of $125 million by year-end 2019;

 

    the combined company will have a capital policy with a target leverage ratio of 2.0 to 3.0 times and execute $1 billion of share repurchases in each of 2017 and 2018, which will provide the combined company with a strong balance sheet with financial flexibility and meaningful capital returns;

 

    the merger will deliver approximately $100 million of run rate revenue opportunities by fiscal year 2019, with the combined company’s subscription-based model to generate approximately 85% in recurring revenues;

 

    the merger will create significant opportunities to offer a more diverse product set to a broader combined customer base as both IHS and Markit have deep, non-overlapping senior relationships across corporate, government, financial services and consumer customers;

 

    the combined company is expected to have an adjusted effective tax rate in the low- to mid- 20% range;

 

    and the merger will enable the combined company to (i) integrate the skill sets and capabilities of each of the companies’ management teams to apply operational and cost discipline across IHS Markit, (ii) take advantage of strategic and innovation opportunities with an enhanced platform with the potential to achieve substantial synergies and improve management and deployment policies, and (iii) generate higher earnings growth and cash flow than either IHS or Markit could on a standalone basis.

 

68


Table of Contents

Other Factors Considered by the IHS Board

In addition to considering the strategic factors described above, the IHS board considered the following additional factors, all of which it viewed as supporting its decision to approve the merger agreement:

 

    its knowledge of IHS’s business, operations, financial condition, earnings and prospects and of Markit’s business, operations, financial condition, earnings and prospects, taking into account the results of IHS’s due diligence review of Markit;

 

    the current and prospective business, economic and market conditions in the industries in which each of IHS and Markit operate;

 

    the opportunities reasonably available to IHS, including remaining a standalone entity, and the IHS board’s belief that the combination with Markit will create the best reasonably available opportunity to maximize value for IHS stockholders;

 

    the recommendation of IHS’s senior management in favor of the merger;

 

    the fact that IHS Markit’s board will initially consist of eleven (11) individuals, six (6) of whom will be designated by IHS and five (5) of whom will be designated by Markit;

 

    the fact that Mr. Stead will serve as the chief executive officer and chairman of IHS Markit until December 31, 2017 and Mr. Uggla will serve as the president and a board member of IHS Markit until December 31, 2017 and thereafter serve as the chief executive officer and chairman;

 

    the fact that certain provisions of the bye-laws of IHS Markit would require the affirmative vote of not less than 75% of the members of the IHS Markit board, and the IHS board’s belief that these arrangements would reasonably assure the continuity of the management and oversight of IHS Markit following completion of the merger and allow a strong management team drawn from both IHS and Markit to work together to integrate the two companies;

 

    the evaluation of the transaction by M. Klein;

 

    the financial analyses and presentation of Goldman Sachs, and Goldman Sachs’ opinion, dated March 20, 2016, to the IHS board that, as of March 20, 2016, and based upon and subject to the factors and assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to holders (other than Markit and its affiliates) of IHS common stock, as more fully described below under the section entitled “—Opinion of IHS’s Financial Advisor—Goldman Sachs” beginning on page 87 of this joint proxy statement/prospectus;

 

    the fact that the merger agreement provides for a fixed exchange ratio and that no adjustment will be made in the merger consideration to be received by IHS stockholders in the merger as a result of possible increases or decreases in the trading price of the IHS common stock or Markit common shares following the announcement of the merger;

 

    the fact that the merger and the all-stock consideration offered in connection therewith provide IHS stockholders with an opportunity to participate in the equity value of IHS Markit, including future growth and the expected synergies resulting from the merger;

 

    the fact that, based on the shares of IHS common stock outstanding, IHS stockholders would own approximately 57% of IHS Markit on a fully diluted basis;

 

    the terms and conditions of the merger agreement, including the commitments made by IHS and Markit in the merger agreement with respect to obtaining regulatory clearances, including with respect to the HSR Act and, approval from the BKartA;

 

    the IHS board’s view, after consultation with its legal counsel, concerning the likelihood that regulatory approvals and clearances necessary to consummate the merger would be obtained;

 

69


Table of Contents
    the fact that the merger agreement does not preclude IHS from responding to and negotiating certain unsolicited alternative transaction proposals from third parties made prior to the time IHS stockholders adopt the merger agreement;

 

    the restrictions in the merger agreement on Markit’s ability to respond to and negotiate certain alternative transaction proposals from third parties, the requirement that Markit pay IHS a $195 million termination fee if the merger agreement is terminated under certain circumstances and the inability of Markit to terminate the merger agreement in connection with a change of recommendation by the Markit board;

 

    the IHS board’s right to withhold, withdraw or change its recommendation to IHS stockholders to vote “FOR” the IHS merger proposal if a superior proposal is available, subject to IHS being obligated to pay Markit a termination fee of $272 million in the event Markit terminates the merger agreement prior to the IHS stockholders’ vote on the IHS merger proposal or in certain other circumstances in which IHS enters into an alternative transaction agreement within 12 months after the termination of the merger agreement; and

 

    the inability of Markit to terminate the merger agreement in connection with the Markit board withholding, withdrawing or changing its recommendation to Markit shareholders to vote “FOR” the Markit share issuance proposal, the Markit name change proposal and the Markit amended bye-laws proposal, and the ability of IHS to terminate the merger agreement prior to the Markit shareholders’ meeting and collect a termination fee of $195 million if such a change of recommendation occurs.

The IHS board weighed these advantages and opportunities against a number of other risks and potential negative factors concerning the merger agreement and the merger, including:

 

    the challenges inherent in the combination of two companies of the size, geographical diversity and scope of IHS and Markit, including the risk that integration costs may be greater than anticipated and the possible diversion of management attention for an extended period of time;

 

    the challenges of developing and executing a successful strategy and business plan for IHS Markit, including the risk of not capturing all the anticipated cost savings and synergies between IHS and Markit and the risk that other anticipated benefits of the merger might not be realized;

 

    the difficulties of combining the businesses and workforces of IHS and Markit;

 

    the restrictions in the merger agreement on IHS’s ability to respond to and negotiate certain alternative transaction proposals from third parties, the requirement that IHS pay Markit a $272 million termination fee if the merger agreement is terminated under certain circumstances and the inability of IHS to terminate the merger agreement in connection with a change of recommendation by the IHS board, and the risk that such restrictions and termination fee may discourage third parties that might otherwise have an interest in a business combination with, or acquisition of, IHS from making alternative proposals;

 

    the fact that the merger agreement does not preclude Markit from responding to and negotiating certain unsolicited alternative transaction proposals from third parties made prior to the time Markit shareholders adopt the merger agreement;

 

    the restrictions in the merger agreement on the conduct of IHS’s business during the period between execution of the merger agreement and the consummation of the merger;

 

    the risk that IHS stockholders or Markit shareholders, as applicable, may vote down the proposals at the IHS special meeting or Markit special meeting;

 

    the risk that regulatory agencies may object to and challenge the merger or may impose terms and conditions in order to resolve those objections that adversely affect the financial results of IHS Markit; see the section entitled “—Regulatory Approvals” beginning on page 117 of this joint proxy statement/prospectus;

 

70


Table of Contents
    the amount of time it could take to complete the merger, including the fact that completion of the merger depends on factors outside of IHS’s or Markit’s control, and the risk that the pendency of the merger for an extended period of time following the announcement of the execution of the merger agreement could have an adverse impact on IHS or Markit;

 

    the potential for diversion of management and employee attention during the period prior to completion of the merger, and the potential negative effects on IHS’s and/or Markit’s businesses;

 

    the risk that, despite the retention efforts of IHS and Markit prior to the consummation of the merger, IHS Markit may lose key personnel;

 

    the possibility that IHS Markit might not achieve its projected financial results;

 

    the potential that the fixed exchange ratio under the merger agreement could result in IHS delivering greater value to the Markit shareholders than had been anticipated by IHS should the value of the shares of IHS common stock increase relative to the value of Markit common shares from the date of the execution of the original merger agreement;

 

    that the merger consideration would be taxable to IHS stockholders;

 

    the risk that changes in the regulatory landscape or new industry developments, including changes in consumer preferences, may adversely affect the business benefits anticipated to result from the merger;

 

    the risk that, upon consummation of the merger, the counterparties under certain material contracts of IHS and Markit may be able to exercise certain “change of control” rights; and

 

    the risks of the type and nature described under “Risk Factors” beginning on page 28 of this joint proxy statement/prospectus and the matters described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus.

The foregoing discussion of the factors considered by the IHS board is not intended to be exhaustive, but rather includes the principal factors considered by the IHS board. In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the IHS board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and to make its recommendations to IHS stockholders. In addition, individual members of the IHS board may have given differing weights to different factors. The IHS board conducted an overall review of the factors described above, including thorough discussions with the IHS management and outside legal and financial advisors.

In considering the recommendation of the IHS board to approve the IHS merger proposal, IHS stockholders should be aware that IHS’s directors may have interests in the merger that are different from, or in addition to, those of IHS stockholders generally. For additional information, see the section entitled “—Interests of IHS Directors and Executive Officers in the Merger” beginning on page 97 of this joint proxy statement/prospectus.

The explanation of the reasoning of the IHS board and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus.

Certain Markit Forecasts

Markit does not as a matter of course make public forecasts as to future performance, revenues, earnings or other results due to the unpredictability and uncertainty of the underlying assumptions and estimates. However, in connection with the review of the merger, Markit’s management prepared and provided to Markit’s financial advisor and board of directors, as well as to IHS, certain non-public, unaudited prospective internal financial information regarding Markit’s anticipated future operations for the fiscal years ending December 31, 2016

 

71


Table of Contents

through 2018. In addition, in connection with the merger, Markit management directed J.P. Morgan to derive extrapolations of these standalone regular forecasts, in all respects on the basis and in accordance with directions that were provided to J.P. Morgan by Markit management, to cover the fiscal years ending December 31, 2019 through 2025. This unaudited prospective financial information, which we refer to as the Markit management forecasts, treats Markit on a stand-alone basis, without giving effect to, and as if Markit never contemplated, the merger, including the impact of negotiating or executing the merger, the expenses that may be incurred in connection with consummating the merger, the potential synergies that may be achieved by the combined company as a result of the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. Markit’s management also jointly prepared with the IHS management certain estimates of synergies expected to be realized following the closing, which we refer to in this section as the estimated synergies. The estimated synergies are not reflected in the Markit management forecasts.

The Markit management forecasts included three scenarios for Markit’s future performance. The first scenario, which we refer to as the scenario one forecasts, was based on Markit’s standalone regular forecasts for the fiscal years ending December 31, 2016 through 2018, which were prepared by Markit management for purposes of standalone planning and budgeting and not in connection with the merger, and which were presented to the Markit board of directors in December 2015. The scenario one forecasts were provided to Markit’s financial advisor in February 2016 and presented to the Markit board of directors at its meetings on February 18, March 3, March 9-10, March 17 and March 19, 2016, and were also provided to IHS. In addition, in March 2016, Markit management and the Markit board of directors observed Markit’s sales performance and general market conditions for the first quarter of 2016 to date and noted that, if early sales levels or general market conditions were to continue in the future, Markit could fail to achieve the scenario one forecasts. As a result, at its meeting on March 9-10, 2016, the Markit board of directors directed Markit management to prepare two additional scenarios for Markit’s future performance, which we refer to as the scenario two forecasts and the scenario three forecasts, respectively. The scenario two forecasts assumed revenue growth impact of negative 150 basis points relative to the scenario one forecasts. The scenario three forecasts assumed revenue growth impact of negative 300 basis points relative to the scenario one forecasts. All other assumptions for the scenario two forecasts and the scenario three forecasts were the same as for the scenario one forecasts. The scenario two forecasts and the scenario three forecasts were presented to the Markit board of directors at its meetings on March 17 and March 19, 2016 and were also provided to IHS. Each of the scenarios presented to the Market board of directors was presented with the extrapolations referred to above for the fiscal years ending December 31, 2019 through 2025. Markit management directed J.P. Morgan to view each of the scenarios included in the Markit management forecasts as equally likely and to not rely on any of such scenarios independently.

Markit has included below a summary of the Markit management forecasts, as well as a summary of the estimated synergies in the section entitled “—Certain Estimated Synergies” to provide its shareholders access to certain non-public unaudited prospective internal financial information that was furnished to the above-listed parties and considered by the Markit financial advisors in connection with its financial analyses.

The Markit management forecasts and the estimated synergies were not prepared for the purpose of public disclosure, nor were they prepared in compliance with IFRS, U.S. GAAP, the published guidelines of the SEC regarding projections and forward-looking statements, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or the guidelines established by the International Accounting Standards Board for preparation and presentation of financial forecasts, but in the view of Markit management were prepared on a reasonable basis, reflect the best available estimates and judgments at the time the Markit management forecasts were prepared, and present, to the best of Markit management’s knowledge and belief at the time the Markit management forecasts were prepared, the expected course of action and the expected future financial performance of Markit and the expected

 

72


Table of Contents

synergies to be derived in connection with the merger. The Markit management forecasts were prepared consistent with the accounting policies used in Markit’s historical financial statements and Markit’s management is not aware of any significant accounting standard changes applicable in 2016. The inclusion of the Markit management forecasts and estimated synergies below should not be regarded as an indication that Markit or the Markit board considered, or currently considers, such information to be a reliable predictor of actual future results. Although Markit management believes that, at the time the Markit management forecasts were prepared, there was a reasonable basis for the Markit management forecasts and the estimated synergies, Markit cautions shareholders that future results could be materially different from the Markit management forecasts or estimated synergies. The summary of the Markit management forecasts and estimated synergies is not being included in this joint proxy statement/prospectus to influence your decision whether to vote for the Markit required shareholder proposals or the IHS merger proposal, but rather because these internal financial forecasts were provided by Markit to IHS, as well as to Markit’s and IHS’s respective financial advisors and boards of directors for purposes of considering and evaluating the merger and the merger agreement. Neither Markit’s independent registered public accounting firm nor any other independent accountant has examined, compiled or performed any procedures with respect to the accompanying prospective financial information, or expressed any opinion or any other form of assurance on such information or its achievability and they assume no responsibility for and have disclaimed any association with such information. The independent registered public accounting firm report issued by PricewaterhouseCoopers LLP, London, United Kingdom (PwC UK) incorporated by reference in this document relates to Markit’s historical financial information. It does not extend to the Markit management forecasts and should not be read to do so.

The Markit management forecasts and the estimated synergies are subjective in many respects and, as a result, subject to interpretation. While presented with numeric specificity, the Markit management forecasts and the estimated synergies were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Markit’s management. Important factors that may affect actual results and cause the Markit management forecasts and/or the estimated synergies to not be achieved include, but are not limited to, risks and uncertainties relating to Markit’s, IHS’s or (with respect to the estimated synergies) the combined company’s businesses (including their ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and, with respect to the estimated synergies, the ability of IHS and Markit to integrate their businesses successfully, to achieve anticipated synergies, changes in tax laws and changes in currency exchange rates and, in each case, the other factors described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus. See also “Where you Can Find More Information” and “Risk Factors” beginning on pages 201 and 28, respectively, of this joint proxy statement/prospectus. The Markit management forecasts and estimated synergies also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from the Markit management forecasts and/or the estimated synergies. Accordingly, there can be no assurance that the Markit management forecasts and/or the estimated synergies will be realized or that actual results will not be significantly lower or higher than estimated. Portions of the Markit management forecasts and estimated synergies cover multiple years. Such information by its nature becomes less predictive with each successive year.

The Markit management forecasts reflect various assumptions and estimates that Markit management made in good faith at the time that the Markit management forecasts were prepared, all of which are difficult to predict and many of which are beyond Markit’s control, including, without limitation:

 

    an economic environment, competitive environment and regulatory requirements consistent with conditions existing and known at the time of preparation of the projections;

 

    2016 to 2018 segmental revenue growth trends broadly in line with published long term guidance, with additional incremental growth associated with our price increase strategy;

 

    a return to revenue growth in Markit’s processing division in 2016 and a conservative, low growth, assumption for new business initiatives;

 

73


Table of Contents
    revenue growth reducing from 2019 on a straight line basis to a terminal growth rate of 2.5%;

 

    no acquisitions are undertaken, other than those communicated pre-merger announcement;

 

    EBITDA operating expenses growth in line with regional inflation levels experienced at the date of preparation of the plan, with assumed continuation of cost reduction and operating efficiency strategies to maintain margin;

 

    capital expenditure in line with Markit’s published long term guidance (9-11% of revenue);

 

    a stable tax environment, with no significant changes in tax legislation or tax rates in the major jurisdiction in which Markit operates and a standard adjusted effective tax rate, in line with Markit’s long term guidance, of 27%; and

 

    no effects of potential foreign exchange rate fluctuations from the date that the Markit management forecasts were prepared.

These assumptions are inherently uncertain, were made as of the time the prospective financial information was prepared, and may not be reflective of actual results, either now or in the future, in light of changed circumstances, economic conditions, or other developments.

Markit uses a variety of financial measures that are not in accordance with IFRS for forecasting, budgeting and measuring operating performance, including Adjusted EBITDA (which has been calculated as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortization on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share based compensation and related items, net other gains or losses, including Adjusted EBITDA attributable to joint ventures and excluding Adjusted EBITDA attributable to non-controlling interests). The Markit management forecasts and estimated synergies include certain other non-IFRS financial measures. While Markit believes that these non-IFRS financial measures provide meaningful information to help investors understand its operating results and to analyze Markit’s financial and business trends on a period-to-period basis, there are limitations associated with the use of these non-IFRS financial measures. These non-IFRS financial measures are not prepared in accordance with IFRS, are not reported by all of Markit’s competitors and may not be directly comparable to similarly titled measures of Markit’s competitors (including IHS) due to potential differences in the exact method of calculation. Further, these non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures.

None of Markit, IHS or their respective affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from the Markit management forecasts and/or estimated synergies, and, except as required by applicable securities laws, none of them undertakes any obligation to update, or otherwise revise or reconcile, the Markit management forecasts or estimated synergies to reflect circumstances existing after the date such forward-looking information was generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Markit management forecasts or the estimated synergies, as applicable, are shown to be in error. Except as required by applicable securities laws, Markit does not intend to make publicly available any update or other revision to the Markit management forecasts or estimated synergies, even in the event that any or all assumptions are shown to be in error. None of Markit or its affiliates, advisors, officers, directors or representatives has made or makes any representation to any shareholder or other person regarding Markit’s ultimate performance compared to the information contained in the Markit management forecasts or estimated synergies or that forecasted results will be achieved. Markit has made no representation to IHS, in the merger agreement or otherwise, concerning the Markit management forecasts or the estimated synergies. The Markit management forecasts do not take into account any circumstances or events occurring after the date that they were prepared. The inclusion of this information should not be regarded as an indication that the Markit board of Directors, Markit, J.P. Morgan or any other recipient of this information considered, or now considers, the Markit management forecasts to be material information of Markit.

 

74


Table of Contents

Summary of the Markit Management Forecasts(1)

 

     Year Ended December 31,  
     2016E      2017E      2018E  
Scenario One         

Revenue

   $ 1,277       $ 1,387       $ 1,517   

Adjusted EBITDA(2)

   $ 567       $ 627       $ 704   

Acquisitions(3)

   $ (30    $ (98    $ (15
Scenario Two         

Revenue

   $ 1,260       $ 1,350       $ 1,456   

Adjusted EBITDA(2)

   $ 560       $ 610       $ 675   

Acquisitions(3)

   $ (30    $ (98    $ (15
Scenario Three         

Revenue

   $ 1,243       $ 1,313       $ 1,397   

Adjusted EBITDA(2)

   $ 553       $ 594       $ 648   

Acquisitions(3)

   $ (30    $ (98    $ (15

 

(1) All figures in US dollar millions.
(2) Adjusted EBITDA is calculated as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortization on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share based compensation and related items, net other gains or losses, including Adjusted EBITDA attributable to joint ventures and excluding Adjusted EBITDA attributable to non-controlling interests.
(3) Acquisitions represent cash flows associated with deferred consideration and a put/call option to purchase a minority shareholding as recorded on the December 31, 2015 balance sheet, and the consideration associated with the transfer of HSBC’s Asian Bond Index completed on January 21,2016.

In addition, J.P. Morgan calculated, from the Markit management forecasts, Unlevered Free Cash Flow for use in certain of its financial analyses:

 

     Year Ended December 31,  
     2016E      2017E      2018E      2019E      2020E      2021E      2022E      2023E      2024E      2025E  
Scenario One                              

Unlevered Free Cash Flow(4)

   $ 235       $ 225       $ 349       $ 396       $ 426       $ 455       $ 480       $ 503       $ 522       $ 536   
Scenario Two                              

Unlevered Free Cash Flow(4)

   $ 231       $ 216       $ 333       $ 373       $ 397       $ 418       $ 437       $ 454       $ 468       $ 481   
Scenario Three                              

Unlevered Free Cash Flow(4)

   $ 227       $ 207       $ 318       $ 352       $ 369       $ 384       $ 398       $ 410       $ 420       $ 431   

 

(4) Unlevered Free Cash Flow, as calculated by J.P. Morgan from the Markit management forecasts for use in certain of its financial analyses, represents unlevered net operating profit after tax, adjusted for depreciation and amortization, capital expenditures, changes in net working capital, and cash flow from acquisitions.

In connection with the merger, the Markit board reviewed, and Markit management directed J.P. Morgan to use in certain of its financial analyses, the IHS management forecasts provided by IHS for the fiscal years ending November 30, 2016 through November 30, 2018 (as described below under “—Certain IHS Forecasts”). The IHS management forecasts for Adjusted Net Income and Adjusted EPS provided by IHS to Markit and J.P. Morgan differed from those provided to IHS’s financial advisors and set forth under “—Certain IHS Forecasts” as a result of differing assumptions, and are set forth below:

 

     Year Ended November 31,(1)  
     2016      2017      2018  

Adjusted Net Income

   $ 423       $ 478       $ 540   

Adjusted EPS

   $ 6.18       $ 6.98       $ 7.89   

 

(1) Forecast implies net leverage of approximately 2.9x in 2016, 2.4x in 2017 and 1.9x in 2018 and does not include access to global capital for acquisitions and enhanced share repurchases.

 

75


Table of Contents

In connection with the merger, Markit management directed J.P. Morgan to derive extrapolations of the IHS management forecasts for the fiscal years ending November 30, 2016 through November 30, 2018 (as described below under “–Certain IHS Forecasts”), on the basis and in accordance with directions that were provided to J.P. Morgan by Markit management, to cover the fiscal years ending November 30, 2019 through November 30, 2025. In providing these directions to J.P. Morgan, Markit management took into account IHS estimates, discussions with IHS management, publicly available information regarding IHS including sell side analyst estimates, and Markit management’s knowledge of and experience in the information services industry. In addition, J.P. Morgan calculated, from the IHS management forecasts (including the extrapolations referred to in the preceding sentences for the fiscal years ending November 30, 2019 through 2025), Unlevered Free Cash Flow for use in certain of its financial analyses:

 

     Year Ended November 30,  
     2016E      2017E      2018E      2019E      2020E      2021E      2022E      2023E      2024E      2025E  

Unlevered Free Cash Flow(5)

   $ 392       $ 478       $ 517       $ 535       $ 566       $ 596       $ 623       $ 648       $ 670       $ 687   

 

(5) Unlevered Free Cash Flow, as calculated by J.P. Morgan from the IHS management forecasts for use in certain of its financial analyses, represents unlevered net operating profit after tax, adjusted for depreciation and amortization, capital expenditures, and changes in net working capital.

Certain IHS Forecasts

IHS does not as a matter of course make public forecasts as to future performance, revenues, earnings or other results due to the unpredictability and uncertainty of the underlying assumptions and estimates. However, in connection with the review of the merger, the IHS management prepared and provided to Markit, as well as to Markit’s financial advisor and board of directors, certain non-public, unaudited prospective internal financial information regarding IHS’s anticipated future operations for the fiscal years ending November 30, 2016 through November 30, 2018, and prepared and provided to IHS and its financial advisors and board of directors certain non-public, unaudited prospective internal financial information regarding IHS’s anticipated future operations for the fiscal years ending November 30, 2016 through 2020. This unaudited prospective financial information, which we refer to as the IHS management forecasts, was prepared and provided in February 2016, treating IHS on a stand-alone basis, without giving effect to, and as if IHS never contemplated, the merger, including the impact of negotiating or executing the merger, the expenses that may be incurred in connection with consummating the merger, the potential synergies that may be achieved by IHS Markit as a result of the merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. In March 2016, IHS also prepared and provided to its financial advisors and board of directors financial information based on the Markit management forecasts, regarding Markit’s anticipated future operations for the fiscal years ended November 30, 2016 through 2018. In March 2016, the IHS management also jointly prepared with Markit’s management certain estimates of synergies expected to be realized following the closing, which we refer to in this section as the estimated synergies. The estimated synergies are not reflected in the IHS management forecasts.

IHS has included below a summary of the IHS management forecasts as well as a summary of the estimated synergies in the section entitled “—Certain Estimated Synergies” to provide its stockholders access to certain non-public unaudited prospective internal financial information that was furnished to the above-listed parties and considered by the IHS financial advisors in connection with their respective financial analyses.

The IHS management forecasts and the estimated synergies were not prepared for the purpose of public disclosure, nor were they prepared in compliance with IFRS, U.S. GAAP, the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, but in the view of IHS management were prepared on a reasonable basis,

 

76


Table of Contents

reflect the best available estimates and judgments at the time the IHS management forecasts were prepared, and present, to the best of IHS management’s knowledge and belief at the time the IHS management forecasts were prepared, the expected course of action and the expected future financial performance of IHS and the expected synergies to be derived in connection with the merger. The inclusion of the IHS management forecasts and estimated synergies below should not be regarded as an indication that IHS or the IHS board considered, or currently considers, such information to be a reliable predictor of actual future results. Although IHS management believes that, at the time the IHS management forecasts were prepared, there was a reasonable basis for the IHS management forecasts and the estimated synergies, IHS cautions shareholders that future results could be materially different from the IHS management forecasts or estimated synergies. The summary of the IHS management forecasts and estimated synergies is not being included in this joint proxy statement/prospectus to influence your decision whether to vote for the IHS merger proposal or the Markit proposals, but rather because these internal financial forecasts were provided by IHS to Markit, as well as to IHS’s and Markit’s respective financial advisors and boards of directors, for purposes of considering and evaluating the merger and the merger agreement.

Neither the independent registered public accounting firm of IHS nor any other independent accountants have compiled, examined or performed any audit or other procedures with respect to the unaudited prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. The report of the independent registered public accounting firm of IHS contained in IHS’s Annual Report on Form 10-K for the year ended November 30, 2015, which is incorporated by reference into this registration statement, relates to the historical financial information of IHS and does not extend to the unaudited prospective financial information and should not be read to do so. Furthermore, the unaudited prospective financial information does not take into account any circumstances or events occurring after the date on which it was prepared. The independent registered public accounting firm report issued by Ernst & Young LLP, Denver, Colorado, United States of America (E&Y US) incorporated by reference in this document relates to IHS’s historical financial information. It does not extend to the IHS management forecasts and should not be read to do so.

The IHS management forecasts and the estimated synergies are subjective in many respects and, as a result, subject to interpretation. While presented with numeric specificity, the IHS management forecasts and the estimated synergies were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of the IHS management. Important factors that may affect actual results and cause the IHS management forecasts and/or the estimated synergies to not be achieved include, but are not limited to, risks and uncertainties relating to IHS’s or Markit’s businesses (including their ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the regulatory environment, general business and economic conditions, the ability of Markit and IHS to integrate their businesses successfully and to achieve anticipated synergies, and other factors described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus. See also “Where you Can Find More Information” and “Risk Factors” beginning on pages 201 and 28, respectively, of this joint proxy statement/prospectus. The IHS management forecasts and estimated synergies also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from the IHS management forecasts and/or the estimated synergies. Accordingly, there can be no assurance that the IHS management forecasts and/or the estimated synergies will be realized or that actual results will not be significantly lower or higher than estimated. Portions of the IHS management forecasts and estimated synergies cover multiple years. Such information by its nature becomes less predictive with each successive year.

The IHS management forecasts reflect various assumptions and estimates that IHS management made in good faith at the time that the IHS management forecasts were prepared, all of which are difficult to predict and many of which are beyond IHS’s control. In preparing the IHS Projections and the Markit Projections, IHS management made numerous assumptions about IHS and Markit’s respective industries, markets, products and services. IHS management took into account Markit estimates and scenarios, discussions with Markit management, publicly available information regarding Markit including sell side analyst estimates, and IHS

 

77


Table of Contents

management’s knowledge of and experience in the information services industry. In addition, in order to ensure consistency in financial projections, IHS management made certain adjustments to the Markit projections including normalizing differences in fiscal years and accounting principles.

IHS uses a variety of financial measures that are not in accordance with U.S. GAAP for forecasting, budgeting and measuring operating performance, including adjusted EBITDA (which has been calculated as net income plus or minus net interest, plus provision for income taxes, depreciation and amortization and further excludes primarily non-cash items and other items that we do not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, restructuring charges, acquisition-related costs, asset impairment charges, gain or loss on sale of assets, gain or loss on debt extinguishment, pension mark-to-market and settlement expense, and income or loss from discontinued operations), and which we refer to in the table below as adjusted EBITDA). The IHS management forecasts and estimated synergies include certain other non-GAAP financial measures. While IHS believes that these non-GAAP financial measures provide meaningful information to help investors understand its operating results and to analyze IHS’s financial and business trends on a period-to-period basis, there are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with U.S. GAAP, are not reported by all of IHS’s competitors and may not be directly comparable to similarly titled measures of IHS’s competitors due to potential differences in the exact method of calculation. Further, these non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures.

None of IHS, Markit or their respective affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from the IHS management forecasts and/or estimated synergies, and, except as required by applicable securities laws, none of them undertakes any obligation to update, or otherwise revise or reconcile, the IHS management forecasts or estimated synergies to reflect circumstances existing after the date such forward-looking information was generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the IHS management forecasts or the estimated synergies, as applicable, are shown to be in error. Except as required by applicable securities laws, IHS does not intend to make publicly available any update or other revision to the IHS management forecasts or estimated synergies, even in the event that any or all assumptions are shown to be in error. Since the date of the IHS management forecasts, IHS has made publicly available its actual results of operations for the fiscal year ended November 30, 2015. You should review IHS’s Annual Report on Form 10-K filed with the SEC on January 15, 2016. None of IHS or its respective affiliates, advisors, officers, directors or representatives has made or makes any representation to any stockholder or other person regarding IHS’s ultimate performance compared to the information contained in the IHS management forecasts or estimated synergies or that forecasted results will be achieved. IHS has made no representation to Markit, in the merger agreement or otherwise, concerning the IHS management forecasts or the estimated synergies. The IHS management forecasts do not take into account any circumstances or events occurring after the date that they were prepared. The inclusion of this information should not be regarded as an indication that the IHS board, IHS, Goldman Sachs or any other recipient of this information considered, or now considers, the IHS management forecasts to be material information of IHS.

Summary of the IHS Management Forecasts

($ in millions, except per share figures)

IHS

 

     Year Ended November 30,  
     2016E      2017E      2018E      2019E      2020E  

Total Revenue

   $ 2,392       $ 2,524       $ 2,700       $ 2,903       $ 3,135   

Adjusted EBITDA(1)

   $ 796       $ 876       $ 967       $ 1,069       $ 1,185   

Adjusted Net Income(2)

   $ 430       $ 477       $ 517       $ 563       $ 618   

Adjusted Diluted EPS

   $ 6.10       $ 7.07       $ 8.26       $ 9.67       $ 11.41   

 

78


Table of Contents

 

(1) Adjusted EBITDA has been calculated as net income plus or minus net interest, plus provision for income taxes, depreciation and amortization and further excludes primarily non-cash items and other items that we do not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, restructuring charges, acquisition-related costs, asset impairment charges, gain or loss on sale of assets, gain or loss on debt extinguishment, pension mark-to-market and settlement expense, and income or loss from discontinued operations).
(2) Adjusted net income has been calculated as net income plus primarily non-cash items and other items that management does not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, amortization related to acquired intangible assets, restructuring charges, acquisition-related costs, acquisition financing fees, asset impairment charges, gain or loss on sale of assets, gain or loss on debt extinguishment, pension mark-to-market and settlement expense, and income or loss from discontinued operations, all net of the related tax effects).

MARKIT(1)

 

     Year Ended November 30,(2)(3)  
     2016P      2017P      2018P      2019P      2020P  

Total Revenue

   $ 1,206       $ 1,281       $ 1,354       $ 1,449       $ 1,555   

Adjusted EBITDA(4)

   $ 512       $ 545       $ 576       $ 617       $ 662   

Adjusted Net Income(5)

   $ 266       $ 288       $ 309       $ 333       $ 363   

Adjusted Diluted EPS (U.S. GAAP)

   $ 1.41       $ 1.63       $ 1.81       $ 2.01       $ 2.28   

 

(1) IHS management adjusted Markit forecasts to reflect Markit’s scenarios, publicly available information regarding Markit, IHS management’s knowledge of and experience in the information services industry, and differences in accounting principles.
(2) IHS management adjusted Markit forecasts to reflect pro forma fiscal year end of November 30.
(3) In addition to the adjustments made to derive Markit’s Revenue and projected EBITDA as outlined above, IHS management developed its own assumptions for Markit’s standalone: tax rate, capital structure and annual share repurchase assumptions to arrive at the above forecasts for Adjusted Net Income and Adjusted Diluted EPS.
(4) Represents forecast of non-GAAP Adjusted EBITDA defined as profit for the period from continuing operations before income taxes, net finance costs, depreciation and amortization on fixed assets and intangible assets (including acquisition related intangible assets), acquisition related items, exceptional items, share based compensation and related items, net other gains or losses including Adjusted EBITDA attributable to joint ventures and excluding Adjusted EBITDA attributable to non-controlling interests, further adjusted for estimated differences between IFRS and U.S. GAAP accounting standards.
(5) Represents forecast of non-GAAP Adjusted Net Income defined as profit for the period from continuing operations before amortization of acquired intangible assets, acquisition related items, exceptional items, share based compensation and related items, net other gains or losses, less the tax effects of these adjustments and excluding Adjusted Earnings attributable to non-controlling interests, further adjusted for estimated differences between IFRS and U.S. GAAP accounting standards.

IHS and MARKIT

In addition, using the IHS management forecasts, unlevered free cash flow of IHS and Markit and pro forma unlevered free cash flow for IHS Markit were calculated by Goldman Sachs for use in certain of its financial analysis:

 

     Nine Months
Ended
November 30,
     Year Ended November 30,  
     2016E      2017E      2018E      2019E      2020E  

IHS Unlevered Free Cash Flow(1)

   $ 320       $ 529       $ 579       $ 627       $ 690   

Markit Unlevered Free Cash Flow(2)

   $ 180       $ 289       $ 308       $ 334       $ 358   

Pro Forma Unlevered Free Cash Flow(3)

   $ 542       $ 907       $ 1,030       $ 1,171       $ 1,255   

 

79


Table of Contents

 

(1) Unlevered Free Cash Flow is calculated as adjusted EBITDA, minus stock-based compensation, plus other expense, minus taxes (as calculated on adjusted EBIT), minus capital expenditures and plus or minus, as applicable, the increase or decrease in working capital, in each case, as set forth in the IHS management forecasts.
(2) Unlevered Free Cash Flow is calculated as adjusted EBITDA, minus stock-based compensation, plus other expense, minus taxes (as calculated on adjusted EBIT), minus capital expenditures, minus capital expenditures for acquired intangibles, and plus or minus, as applicable, the increase or decrease in working capital, in each case, as set forth in the IHS management forecasts.
(3) Pro Forma—Unlevered Free Cash Flow is calculated as adjusted EBITDA including forecasted synergies, minus stock-based compensation, plus other expense, minus taxes (as calculated on adjusted EBIT), minus capital expenditures, minus capital expenditures for acquired intangibles, and plus or minus, as applicable, the increase or decrease in working capital, in each case, as set forth in the IHS management forecasts.

Certain Estimated Synergies

IHS management and Markit management also jointly prepared certain estimated unaudited synergies that were projected to result from the merger and be realized by the combined company, assuming that the closing occurs by December 31, 2016, which we refer to in this section as the estimated synergies. IHS management provided the estimated synergies to the IHS board in connection with its review and evaluation of the proposed merger and to the IHS financial advisors. Markit management provided the estimated synergies to the Markit board in connection with its review and evaluation of the proposed merger and to Markit’s financial advisor. The estimated synergies included $125 million in cost synergies for the fiscal year ending December 31, 2019 (on an in-year basis) and $100 of revenue synergies for the fiscal year ending December 31, 2019 (on a run-rate basis).

The estimated synergies assumed that the merger would be consummated and that the expected benefits of the merger would be realized, including that no restrictions, terms or other conditions would be imposed in connection with the receipt of any necessary governmental, regulatory or other approvals or consents in connection with the consummation of the proposed merger, including any divestitures or other actions contemplated by the merger agreement. See the sections above titled “—Certain IHS Forecasts” and “—Certain Markit Forecasts” for further information regarding the uncertainties and assumptions underlying the estimated synergies as well as the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 27 of this joint proxy statement/prospectus and “Risk Factors—The Combined Company May Fail to Realize the Anticipated Benefits of the Merger” beginning on page 34 of this joint proxy statement/prospectus for further information regarding the uncertainties and factors associated with realizing the synergies in connection with the merger.

In addition, the estimated synergies provided to IHS and Markit’s respective boards of directors and financial advisors included certain structural synergies that were projected by IHS management and Markit management to result from the merger. On April 4, 2016, after IHS and Markit entered into the merger agreement, the U.S. Treasury and the IRS released proposed regulations that, if finalized, may limit the ability of the combined company to put in place incremental intercompany debt with respect to the combined company’s U.S. operations. As noted above, the estimated synergies, including the structural synergies, are not reflected in the standalone Markit management forecasts or the standalone IHS management forecasts. Whether or not the proposed regulations are finalized in their current form, IHS and Markit expect to be able to achieve substantial structural synergies as a result of the merger and believe that any loss of structural synergies due to such regulations would not materially diminish the benefits that are expected to result from the merger. IHS and Markit also believe that the proposed regulations will not impact the combined company’s adjusted effective tax rate guidance of a low to mid-twenties percentage range.

 

80


Table of Contents

Opinion of Markit’s Financial Advisor

J.P. Morgan

Pursuant to an engagement letter dated March 17, 2016, Markit retained J.P. Morgan as its financial advisor in connection with the merger.

At the meeting of the Markit board on March 19, 2016, J.P. Morgan rendered its oral opinion to the Markit board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to Markit. J.P. Morgan confirmed its March 19, 2016 oral opinion by delivering its written opinion to the Markit board, dated March 20, 2016, that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to Markit.

The full text of the written opinion of J.P. Morgan dated March 20, 2016, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Appendix C to this joint proxy statement/prospectus and is incorporated herein by reference. Markit’s shareholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Markit board (in its capacity as such) in connection with and for the purposes of its evaluation of the merger, was directed only to the exchange ratio in the merger and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the exchange ratio to the holders of any class of securities, creditors or other constituencies of Markit or as to the underlying decision by Markit to engage in the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The summary of the opinion of J.P. Morgan set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. The opinion does not constitute a recommendation to any shareholder of Markit as to how such shareholder should vote with respect to the Markit share issuance proposal, the Markit amended bye-laws proposal, the Markit name change proposal, the Markit adjournment proposal or any other matter.

In arriving at its opinion, J.P. Morgan, among other things:

 

    reviewed the merger agreement;

 

    reviewed certain publicly available business and financial information concerning Markit and IHS and the industries in which they operate;

 

    compared the financial and operating performance of Markit and IHS with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of Markit common shares and IHS common stock and certain publicly traded securities of such other companies;

 

    reviewed certain internal financial analyses and forecasts prepared by the managements of Markit and IHS relating to their respective businesses, as well as the estimated amount and timing of cost savings and related expenses and synergies expected to result from the merger, which we refer to as the estimated synergies; and

 

    performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the managements of Markit and IHS with respect to certain aspects of the merger, and the past and current business operations of Markit and IHS, the financial condition and future prospects and operations of Markit and IHS, the effects of the merger on the financial condition and future prospects of Markit and IHS, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

 

81


Table of Contents

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Markit and IHS or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify (and did not assume responsibility or liability for independently verifying) any such information or its accuracy or completeness. J.P. Morgan did not conduct and was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Markit or IHS under any applicable laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, including the estimated synergies, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of management as to the expected future results of operations and financial condition of Markit and IHS to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts (including the estimated synergies) or the assumptions on which they were based. J.P. Morgan also assumed that the merger will have the tax consequences described in discussions with, and materials furnished to J.P. Morgan by, representatives of Markit, and will be consummated as described in the merger agreement. J.P. Morgan also assumed that the representations and warranties made by Markit and IHS in the merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Markit with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Markit or IHS or on the contemplated benefits of the merger.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of its opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion was limited to the fairness, from a financial point of view, of the exchange ratio in the merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to the holders of any class of securities, creditors or other constituencies of Markit or as to the underlying decision by Markit to engage in the merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the merger, or any class of such persons relative to the exchange ratio in the merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Markit common shares or IHS common stock will trade at any future time.

The terms of the merger agreement, including the exchange ratio, were determined through arm’s length negotiations between Markit and IHS, and the decision to enter into the merger agreement was solely that of the Markit board and the IHS board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the Markit board in its evaluation of the merger and should not be viewed as determinative of the views of the Markit board or management with respect to the merger or the exchange ratio.

In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its oral opinion to the Markit board on March 19, 2016 and in the presentation delivered to the Markit board on such date in connection with the rendering of such opinion and the following does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The following is a summary of the material financial analyses utilized by J.P. Morgan in connection with providing its opinion. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Analysis of Implied Equity Value Per Markit Common Share.

For purposes of J.P. Morgan’s financial analyses, the Markit board instructed J.P. Morgan to analyze three scenarios furnished by Markit’s management to J.P. Morgan. Markit Scenario 1, Markit Scenario 2 and Markit

 

82


Table of Contents

Scenario 3 are referred to in this section as the “Markit management forecasts”. For purposes of its opinion, at the instruction of the Markit board, J.P. Morgan viewed each of the scenarios comprising the Markit management forecasts as equally likely and did not rely on any of the scenarios comprising the Markit management forecasts independently. J.P. Morgan expressed no view as to any of the Markit management forecasts or the probabilities assigned to them by Markit’s management.

Public Trading Multiples Analysis. Using publicly available information, J.P. Morgan compared selected financial data of Markit with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to the businesses engaged in by Markit. The companies selected by J.P. Morgan were as follows:

 

    FactSet Research Systems Inc.

 

    IHS Inc.

 

    Markit Ltd.

 

    McGraw Hill Financial, Inc.

 

    MSCI Inc.

 

    Thomson Reuters Corporation

 

    Verisk Analytics, Inc.

With respect to the selected companies, the information J.P. Morgan presented included: (1) the multiple of share price to estimated adjusted earnings per share (adjusted to exclude impact of stock-based compensation and deal-related amortization), based on analyst consensus estimates for the calendar year ended 2016 (referred to in this section as “P/E 2016E”) and the calendar year ended 2017 (referred to in this section as “P/E 2017E”) and (2) the multiple of firm value (calculated as equity value plus non-controlling interest and net debt) to adjusted EBITDA (representing earnings before interest, taxes, depreciation and amortization and stock-based compensation), based on analyst consensus estimates for the calendar year ended 2016 (referred to in this section as “FV/EBITDA 2016E”) and for the calendar year ended 2017 (referred to in this section as “FV/EBITDA 2017E”). Estimated financial data for the selected companies was based on the selected companies’ filings with the SEC and publicly available analyst consensus estimates that J.P. Morgan obtained from FactSet Research Systems. The trading multiples and operating metrics presented were adjusted for stock based compensation and deal related amortization.

Results of this analysis were presented for the selected companies, as indicated in the following table:

 

Public trading multiples analysis: Selected companies

 
     P/E 2016E      P/E 2017E      FV/EBITDA 2016E      FV EBITDA 2017E  

Median

     19.5x         18.0x         13.6x         12.7x   

Mean

     20.3x         18.1x         13.3x         12.3x   

Based on the above analysis, J.P. Morgan then selected (1) a P/E 2016E reference range for Markit of 19.5x to 23.5x, (2) a P/E 2017E reference range for Markit of 18.0x to 20.0x, (3) a FV/EBITDA 2016E reference range for Markit of 12.0x to 14.0x and (4) a FV/EBITDA 2017E reference range for Markit of 11.0x to 13.0x. Applying these ranges to the applicable metrics of Markit under each of the Markit management forecasts, the analysis indicated the following implied per share equity values per Markit common share:

 

Markit public trading multiples analysis: Implied equity value per Markit common share

 
     Markit Scenario 1      Markit Scenario 2      Markit Scenario 3  

P/E 2016E

   $ 32.50 - $39.25       $ 32.00 - $38.75       $ 31.75 - $38.25   

P/E 2017E

   $ 35.50 - $39.50       $ 34.50 - $38.25       $ 33.50 - $37.25   

FV/EBITDA 2016E

   $ 31.75 - $36.75       $ 31.50 - $36.25       $ 31.00 - $35.75   

FV/EBITDA 2017E

   $ 32.25 - $37.75       $ 31.50 - $36.75       $ 30.50 - $35.75   

 

83


Table of Contents

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied fully diluted equity value per share for Markit common shares. J.P. Morgan calculated the unlevered free cash flows that Markit (using each of the scenarios comprising Markit management forecasts) is expected to generate from calendar year 2016 through calendar year 2025, as set forth in the Markit management forecasts. J.P. Morgan also calculated a range of terminal values for Markit at the end of this period by applying terminal value growth rates ranging from 2.25% to 2.75% to the unlevered free cash flows for Markit during the terminal period of the Markit management forecasts. The unlevered free cash flows and the range of terminal values were discounted to present value as of December 31, 2015 using a range of discount ranges of 6.75% to 7.75%, chosen by J.P. Morgan based on an analysis of the weighted average cost of capital of Markit. The present value of the unlevered free cash flows was then adjusted for non-controlling interest and net debt for Markit. This analysis indicated a range of implied equity values for Markit on a standalone basis (i.e., without the estimated synergies), which J.P. Morgan divided by the number of Market fully diluted common shares outstanding, which indicated the following implied equity values per Markit common share:

 

Markit discounted cash flow analysis: Implied equity value per Markit common share

 

Markit Scenario 1

   $ 35.50 - $47.00   

Markit Scenario 2

   $ 32.50 - $42.75   

Markit Scenario 3

   $ 29.75 - $39.00   

Analysis of Implied Equity Value Per Share of IHS Common Stock.

Public Trading Multiples Analysis. Using publicly available information, J.P. Morgan compared selected financial data of IHS with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to the businesses engaged in by IHS. The companies selected by J.P. Morgan were as follows:

 

    FactSet Research Systems Inc.

 

    IHS Inc.

 

    Markit Ltd.

 

    McGraw Hill Financial, Inc.

 

    MSCI Inc.

 

    Thomson Reuters Corporation

 

    Verisk Analytics, Inc.

With respect to the selected companies, the information J.P. Morgan presented included P/E 2016E, P/E 2017E, FV/EBITDA 2016E and FV/EBITDA 2017E, as indicated in the above table entitled “Public trading multiples analysis: Selected companies”.

Based on the above analysis, J.P. Morgan then selected (1) a P/E 2016E reference range for IHS of 17.5x to 22.0x, (2) a P/E 2017E reference range for IHS of 16.0x to 20.0x, (3) a FV/EBITDA 2016E reference range for IHS of 13.5x to 14.5x and (4) a FV/EBITDA 2017E reference range for IHS of 12.5x to 13.5x. Applying these ranges to the applicable metrics of IHS, the analysis indicated the following implied per share equity values per share of IHS common stock:

 

IHS public trading multiples analysis: Implied equity value per share of IHS common stock

 

P/E 2016E

   $ 109.25 - $137.50   

P/E 2017E

   $ 113.00 - $141.25   

FV/EBITDA 2016E

   $ 112.50 - $123.75   

FV/EBITDA 2017E

   $ 115.50 - $128.00   

 

84


Table of Contents

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied fully diluted equity value per share for IHS common stock. J.P. Morgan calculated the unlevered free cash flows that IHS is expected to generate from calendar year 2016 through calendar year 2025, as set forth in the IHS management forecasts. J.P. Morgan also calculated a range of terminal values for IHS at the end of this period by applying terminal value growth rates ranging from 2.25% to 2.75% to the unlevered free cash flows for IHS during the terminal period of the IHS management forecasts. The unlevered free cash flows and the range of terminal values were discounted to present value as of December 31, 2015 using a range of discount ranges of 6.75% to 7.75%, chosen by J.P. Morgan based on an analysis of the weighted average cost of capital of IHS. The present value of the unlevered free cash flows was then adjusted for net debt for IHS. This analysis indicated a range of implied equity values for IHS on a standalone basis (i.e., without the estimated synergies), which J.P. Morgan divided by the number of shares of fully diluted IHS common stock, which indicated a range of implied equity values per share of IHS common stock of $103.50 to $152.00.

Combination Analyses.

Comparison of Implied Equity Value Per Common Share Analyses.

J.P. Morgan presented a comparison of the results of the analyses of the implied equity value per Markit common share and the implied equity value per share of IHS common stock described above. For each comparison, J.P. Morgan calculated the range of implied exchange ratios between (a) the ratio of the highest implied equity value per share of IHS common stock to the lowest implied equity value per Markit common share and (b) the ratio of the lowest implied equity value per share of IHS common stock to the highest implied equity value per Markit common share, as compared to the exchange ratio in the merger of 3.5566x.

Results of these calculations with respect to the public trading multiples analyses for Markit and IHS are indicated in the following table:

 

Combination analysis: Public trading multiples

 
     P/E 2016E      P/E 2017E      FV/EBITDA
2016E
     FV EBITDA 2017E  

Markit Scenario 1

   Implied exchange ratio range      2.79x - 4.22x         2.87x - 3.98x         3.06x - 3.89x         3.06x - 3.97x   

Markit Scenario 2

   Implied exchange ratio range      2.82x - 4.28x         2.95x - 4.10x         3.10x - 3.94x         3.14x - 4.08x   

Markit Scenario 3

   Implied exchange ratio range      2.87x - 4.34x         3.04x - 4.22x         3.14x - 3.99x         3.23x - 4.18x   

Results of these calculations with respect to the discounted cash flow analyses for Markit and IHS are indicated in the following table:

 

Combination analysis: Discounted cash flow

 

Markit Scenario 1

   Implied exchange ratio range      2.20x - 4.28x   

Markit Scenario 2

   Implied exchange ratio range      2.42x - 4.68x   

Markit Scenario 3

   Implied exchange ratio range      2.66x - 5.12x   

Illustrative Value Creation Analysis.

J.P. Morgan conducted an illustrative value creation analysis that compared the implied equity value per Markit common share derived from a discounted cash flow valuation on a standalone basis to the pro forma combined company implied equity value per share. J.P. Morgan determined the pro forma combined company implied equity value per share by calculating the product of (1) (a) the implied equity values of Markit and IHS using the midpoint values determined pursuant to J.P. Morgan’s discounted cash flow analyses described above, plus (b) estimated present value of the estimated synergies, discounted to present value using a discount rate of

 

85


Table of Contents

7.25% and a terminal value growth rate of 2.5%, minus (c) the estimated transaction costs relating to the merger, multiplied by (2) the pro forma equity ownership of the combined company by the existing holders of Markit common shares pursuant to the merger. The analysis indicated, on an illustrative basis, that with and without the structural synergies the merger created hypothetical incremental implied value for the holders of Markit common shares under the midpoint of the implied values in each of the Markit management forecasts.

Miscellaneous.

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of Markit or IHS. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to Markit or IHS, and certain of these companies may have characteristics that are materially different from those of Markit or IHS. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered similar to those of Markit and IHS. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect such companies differently from how they would affect Markit or IHS.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise Markit with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with Markit, IHS and the industries in which they operate.

For financial advisory services rendered in connection with the merger (including the delivery of its opinion), Markit has agreed to pay J.P. Morgan a fee based on a percentage of the Markit firm value which is expected to be up to approximately $40 million based on the trading price of Markit common stock at the close of business prior to transaction announcement on March 18, 2016, $4 million of which was payable upon the delivery by J.P. Morgan of its opinion, and the remainder of which is payable upon the closing. In addition, Markit has agreed to reimburse J.P. Morgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement.

During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with Markit and IHS for which J.P. Morgan and such affiliates

 

86


Table of Contents

have received customary compensation. Such services during such period have included acting as joint bookrunner on Markit’s initial public offering of common shares in June 2014, acting as joint bookrunner on Markit’s follow-on equity offering in June 2015, acting as joint bookrunner on IHS’s senior notes offering in June 2014, acting as lead arranger and joint bookrunner for IHS’s subsidiary, IHS Global Inc., in connection with its credit facility in October 2014 and acting as a lead arranger and joint bookrunner on two of IHS’s credit facilities in October 2014 and February 2016. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding IHS common stock and less than 2% of the outstanding Markit common shares. During the two year period preceding delivery of its opinion, the aggregate fees received by J.P. Morgan from Markit were $6.3 million and from IHS were $8.6 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities of Markit or IHS for their own accounts or for the accounts of customers and, accordingly, they may at any time hold long or short positions in such securities. In addition, it is expected that J.P. Morgan will act as Joint Bookrunner and Joint Lead Arranger on the credit facility of the combined company to be entered into in connection with the consummation of the merger and that J.P. Morgan’s commitment to that credit facility will be greater than its current commitment to IHS’s credit facility.

Opinion of IHS’s Financial Advisor

Goldman Sachs

Goldman Sachs rendered its opinion to the IHS board that, as of as of March 20, 2016 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Markit and its affiliates) of shares of IHS common stock.

The full text of the written opinion of Goldman Sachs, dated March 20, 2016, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D. Goldman Sachs provided its opinion for the information and assistance of the IHS board in connection with its consideration of the combination. The Goldman Sachs opinion is not a recommendation as to how any holder of shares of IHS common stock should vote with respect to the combination or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

    the merger agreement;

 

    annual reports to stockholders and Annual Reports on Form 10-K of IHS for the five fiscal years ended November 30, 2015;

 

    annual reports to shareholders and Annual Reports on Form 20-F of Markit for the two years ended December 31, 2015;

 

    Markit’s Registration Statement on Form F-1, including the prospectus contained therein dated June 18, 2014 relating to an initial public offering of 53,472,353 Markit common shares;

 

    certain interim reports to stockholders and Quarterly Reports on Form 10-Q of IHS;

 

    certain interim reports to shareholders on Form 6-K of Markit;

 

    certain other communications from IHS and Markit to their respective stockholders or shareholders;

 

    certain publicly available research analyst reports for IHS and Markit;

 

    certain financial analyses and forecasts for Markit prepared by its management;

 

    certain internal financial analyses and forecasts for IHS prepared by its management and certain financial analyses and forecasts for Markit prepared by the management of IHS, in each case, as approved for Goldman Sachs’ use by IHS (the “Forecasts”); and

 

    certain operating cost and revenue synergies projected by the managements of IHS and Markit to result from the combination, as approved for Goldman Sachs’ use by IHS (the “Synergies”).

 

87


Table of Contents

Goldman Sachs also held discussions with members of the senior management of IHS regarding their assessment of the strategic rationale for, and the potential benefits of, the combination and the past and then current business operations, financial condition and future prospects of IHS and with members of the senior managements of IHS and Markit regarding their assessments of the past and then current business operations, financial condition and future prospects of Markit; reviewed the reported price and trading activity for the shares of IHS common stock and Markit common shares; compared certain financial and stock market information for IHS and Markit with similar information for certain other publicly traded companies; reviewed the financial terms of certain recent business combinations in the information services industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with IHS’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with IHS’s consent that the Forecasts and the Synergies were reasonably prepared on a basis reflecting the best then currently available estimates and judgments of the management of IHS. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of IHS or Markit or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the combination would be obtained without any adverse effect on IHS or Markit or on the expected benefits of the combination in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs assumed that the combination would be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of IHS to engage in the combination, or the relative merits of the combination as compared to any strategic alternatives that may be available to IHS; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Markit and its affiliates) of shares of IHS common stock, as of the date of the opinion, of the exchange ratio pursuant to the merger agreement. Goldman Sachs does not express any view on, and Goldman Sachs’ opinion does not address, any other term or aspect of the merger agreement or merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the combination, including, the fairness of the combination to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of IHS; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of IHS or Markit, or class of such persons, in connection with the combination, whether relative to the exchange ratio pursuant to the merger agreement or otherwise. Goldman Sachs does not express any opinion as to the prices at which Markit common shares will trade at any time or as to the impact of the combination on the solvency or viability of IHS or Markit or the ability of IHS or Markit to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the board of directors of IHS in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and alone, do not constitute a complete

 

88


Table of Contents

description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 17, 2016 and is not necessarily indicative of current market conditions.

Following Goldman Sachs’ presentation to the IHS board on March 19, 2016 (referred to as the “March 19 Presentation”), Goldman Sachs determined that it had treated incorrectly certain items affecting the calculation of the estimates of unlevered free cash flow used in the pro forma combined company illustrative discounted cash flow analysis. Goldman Sachs subsequently performed such analyses, as of March 19, 2016, using the corrected estimates of unlevered free cash flow for the pro forma combined company (as corrected, referred to as the “Final Pro Forma Combined Company Unlevered Free Cash Flow Estimates”). Such subsequent analyses performed by Goldman Sachs do not address any circumstances, developments or events occurring after March 20, 2016, which is the date of the written opinion of Goldman Sachs, and Goldman Sachs’ opinion set forth in its written opinion letter was provided only as of such date. Based upon and subject to the foregoing, Goldman Sachs confirmed to the IHS board that, had Goldman Sachs performed its financial analyses set forth in the presentation on March 19, 2016 using the Final Pro Forma Combined Company Unlevered Free Cash Flow Estimates, there would have been no change to the conclusion set forth in the written opinion of Goldman Sachs.

Historical Stock Trading Analysis and Exchange Ratio Analysis. Goldman Sachs reviewed the historical trading prices for the shares of IHS common stock and Markit common shares for the 52-week period ended March 17, 2016. Goldman Sachs calculated the premium implied by the implied value per share of IHS common stock in the combination of $105.20 (which implied value per share of IHS common stock was obtained by multiplying the exchange ratio by the closing price of Markit common shares on March 17, 2016) and (1) the closing price per share of IHS common stock on March 17, 2016; (2) the volume-weighted average price, or “VWAP”, per share of IHS common stock during the 30-day period ended on March 17, 2016; and (3) the VWAP per share of IHS common stock for the 52-week period ended on March 17, 2016. This analysis showed the following implied premia:

 

Historical Date or Period

   Premium/(Discount)  

Closing Price per share of IHS common stock on March 17, 2016

     (4.6 )% 

30-Day VWAP

     3.6

52-Week VWAP

     (9.7 )% 

Goldman Sachs also calculated the exchange ratio on March 17, 2016 and historical average exchange ratios over the 1-month, 3-month, 6-month and 1-year periods ended on March 17, 2016, as well as over the period from Markit’s initial public offering to March 17, 2016, by first dividing the closing price per share of IHS common stock on each trading day during each such period by the closing price per Markit common share on the same trading day, and subsequently taking the average of these daily historical exchange ratios over such periods. Goldman Sachs then calculated the premia implied by the exchange ratio to the historical average exchange ratio over various periods. The following table presents the results of this analysis:

 

Historical Date or Period

   IHS/Markit Implied Exchange Ratio      Premium/(Discount) vs. Transaction
Exchange Ratio
 

March 17, 2016

     3.7289 x         4.8

1-Month

     3.7504 x         5.4

3-Month

     3.7303 x         4.9

6-Month

     3.8702 x         8.8

1-Year

     4.2262 x         18.8

Since Markit IPO

     4.5500 x         27.9

Illustrative Financial Contribution Analysis

Goldman Sachs analyzed the implied equity contribution of IHS and Markit to the combined company using actual and estimated future financial metrics, including revenue, earnings before interest, taxes, depreciation and

 

89


Table of Contents

amortization (“EBITDA”) adjusted for stock based compensation and for Markit the depreciation adjustment for IFRS to GAAP conversion (“Adjusted EBITDA”) and net income adjusted for stock based compensation, amortization of intangibles and deferred financing fees (“Adjusted Net Income”) for the year 2015 and for estimated years 2016 through 2018, using IHS public filings, Markit public filings, the Forecasts and market data as of March 17, 2016. The implied equity ownership analysis was conducted on a pro forma basis applying a blended multiple, implied by relative ownership at market price as of March 17, 2016, to IHS’s and Markit’s respective metrics to arrive at an implied enterprise value for each of IHS and Markit and subtracting IHS’s and Markit’s respective net debt as of February 29, 2016, as provided by the management of IHS and Markit, respectively, to calculate an implied equity value for each of IHS and Markit.

The analysis resulted in the following illustrative ranges of the unweighted contribution and implied equity contribution of IHS and Markit, respectively, to the combined company and the implied exchange ratio for a share of IHS common stock into Markit common shares, in each case, using each financial metric for IHS and Markit for the year 2015 and estimated years 2016 through 2018:

 

    

% Unweighted Contribution

  

Implied Equity Ownership

 

2015A, 2016E-2018E

  

IHS

  

Markit

  

IHS

  

Markit

   Exchange Ratio  

Revenue

   66.3%-66.6%    33.4%-33.7%    62.7%-63.0%    37.0%-37.3%      4.5186x-4.5839x   

Adjusted EBITDA

   59.0%-62.7%    37.3%-41.0%    53.3%-58.0%    42.0%-46.7%      3.0683x-3.7165x   

Adjusted Net Income

   59.4%-62.6%    37.4%-40.6%    59.4%-62.6%    37.4%-40.6%      3.9387x-4.5097x   

Illustrative Discounted Cash Flow Analysis

Using the Forecasts and Synergies, Goldman Sachs performed an illustrative discounted cash flow analysis on each of IHS and Markit on a standalone basis and on the pro forma combined entity.

IHS Standalone

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on IHS on a standalone basis to derive a range of illustrative present values per share of IHS common stock. Using discount rates ranging from 7.8% to 8.8%, reflecting estimates of IHS’s weighted average cost of capital, Goldman Sachs discounted to present value as of February 29, 2016 (i) estimates of the projected unlevered free cash flow for IHS for the nine months ending November 30, 2016 and for the fiscal years ending November 30, 2017 through November 30, 2020 as reflected in the Forecasts and (ii) a range of illustrative terminal values for IHS derived by applying perpetuity growth rates ranging from 2.5% to 3.5% to a terminal year estimate of IHS’s unlevered free cash flow as reflected in the Forecasts. Goldman Sachs derived ranges of illustrative enterprise values for IHS by adding the ranges of present values it derived above. Goldman Sachs then subtracted from such range of illustrative enterprise values it derived the amount of IHS net debt as of February 29, 2016, as provided by the management of IHS, to derive a range of illustrative equity values for IHS. Goldman Sachs then divided such range of illustrative equity values it derived by the number of fully diluted outstanding shares of IHS common stock as of February 29, 2016, as provided by the management of IHS, to derive a range of illustrative present values per share of IHS common stock ranging from $107.67 to $169.19.

Markit Standalone

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Markit on a standalone basis to derive a range of illustrative present values per Markit common share. Using discount rates ranging from 7.0% to 8.0%, reflecting estimates of Markit’s weighted average cost of capital, Goldman Sachs discounted to present value as of February 29, 2016 (i) estimates of the projected unlevered free cash flow for Markit for the nine months ending November 30, 2016 and for the fiscal years ending November 30, 2017 through November 30, 2020 as reflected in the Forecasts and (ii) a range of illustrative terminal values for Markit derived by applying perpetuity growth rates ranging from 2.5% to 3.5% to a terminal year estimate of Markit’s

 

90


Table of Contents

unlevered free cash flow as reflected in the Forecasts. Goldman Sachs derived ranges of illustrative enterprise values for Markit by adding the ranges of present values it derived above. Goldman Sachs then subtracted from such range of illustrative values it derived the amount of Markit’s net debt as of February 29, 2016, as provided by the management of Markit, to derive a range of illustrative equity values for Markit. Goldman Sachs then divided such range of illustrative equity values it derived by the number of fully diluted outstanding Markit common shares as of February 29, 2016, as provided by the management of Markit, to derive a range of illustrative present values per Markit common share ranging from $27.27 to $40.36.

Pro Forma Combined Company

Using the Forecasts and Synergies, Goldman Sachs performed an illustrative discounted cash flow analysis on the pro forma combined company to derive a range of illustrative present values per share of the pro forma combined company. Using discount rates ranging from 7.4% to 8.4%, reflecting estimates of the pro forma combined company’s weighted average cost of capital, Goldman Sachs discounted to present value as of February 29, 2016 (i) estimates of the projected unlevered free cash flow for the pro forma combined company for the nine months ending November 30, 2016 and for the fiscal years ending November 30, 2017 through November 30, 2020 as reflected in the Forecasts and (ii) a range of illustrative terminal values for the pro forma combined company derived by applying perpetuity growth rates ranging from 2.5% to 3.5% to a terminal year estimate of the pro forma combined company’s unlevered free cash flow as reflected in the Forecasts. Goldman Sachs derived ranges of illustrative enterprise values for the pro forma combined company by adding the ranges of present values it derived above. Goldman Sachs then subtracted from such range of illustrative values it derived the amount of the pro forma combined company’s net debt as of February 29, 2016, as provided by the management of IHS, to derive a range of illustrative equity values for the pro forma combined company. Goldman Sachs then divided such range of illustrative equity values it derived by the number of fully diluted outstanding shares of the pro forma combined company, as provided by the management of IHS. As set forth in the March 19 Presentation, this analysis indicated a range of illustrative present values per share of the pro forma combined company ranging from $34.64 to $53.55 and applying the exchange ratio of 3.5566x derived a range of illustrative present values per share of IHS common stock of $123.21 to $190.44. Using the Final Pro Forma Combined Company Unlevered Free Cash Flow Estimates, this analysis indicated a range of illustrative present values per share of the pro forma combined company ranging from $34.23 to $52.91 and applying the exchange ratio of 3.5566x derived a range of illustrative present values per share of IHS common stock of $121.75 to $188.19.

Illustrative Public Market Present Value of Future Stock Price Analysis

Using the Forecasts and Synergies, Goldman Sachs performed an illustrative public market present value of future stock price analysis on each of IHS and Markit on a standalone basis and on the pro forma combined entity.

IHS Standalone

Goldman Sachs performed an illustrative analysis of the implied present value of the future price per share of IHS common stock, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity as a function of such company’s estimated future earnings and its assumed price to future earnings per share multiple.

For this analysis, Goldman Sachs used the Forecasts to calculate the illustrative values per share of IHS common stock as of November 30 for 2019 by applying illustrative price to future earnings per share multiples of 15.0x to 20.0x to estimates of forward earnings per share, adjusted to exclude stock based compensation, amortization of intangibles and deferred financing fees (“Adjusted EPS”), for IHS on a standalone basis for 2019, and then discounted these illustrative future values of the shares of IHS common stock to present values as of March 17, 2016, using a range of illustrative discount rates of 9.7% to 10.7%, reflecting an estimate of IHS’s cost of equity. This analysis resulted in a range of implied present values of $115.47 to $158.82 per share of IHS common stock.

 

91


Table of Contents

Markit Standalone

Goldman Sachs performed an illustrative analysis of the implied present value of the future price per Markit common share.

For this analysis, Goldman Sachs used the Forecasts to calculate the illustrative values per Markit common share as of November 30 for 2019 by applying illustrative price to future earnings per share multiples of 15.0x to 20.0x to forward Adjusted EPS estimates for Markit on a standalone basis for 2019, and then discounted these illustrative future values of the Markit common shares to present values as of March 17, 2016, using a range of illustrative discount rates of 8.2% to 9.2%, reflecting an estimate of Markit’s cost of equity. This analysis resulted in a range of implied present values of $24.52 to $33.75 per Markit common share.

Pro Forma Combined Company

Goldman Sachs performed an illustrative analysis of the implied present value of the future price per share of the pro forma combined company.

For this analysis, Goldman Sachs used the Forecasts and Synergies to calculate the illustrative values per share of the pro forma combined company’s common stock as of November 30 for 2019 by applying illustrative price to future earnings per share multiples of 15.0x to 20.0x to forward Adjusted EPS estimates for the pro forma combined company for 2019, and then discounted these illustrative future values of the shares of the pro forma combined company’s common stock to present values as of March 17, 2016, using a range of illustrative discount rates of 9.1% to 10.1%, reflecting an estimate of the pro forma combined company’s cost of equity. This analysis resulted in a range of implied present values of $35.96 to $49.36 per share of the pro forma combined company’s common stock and, by applying the exchange ratio of 3.5566x, a range of implied present values per share of IHS common stock of $127.91 to $175.55.

Illustrative Pro Forma Accretion / Dilution Analysis

Goldman Sachs performed illustrative pro forma analyses of the potential financial impact of the combination on Adjusted EPS for IHS and Markit using the Forecasts and Synergies. For each of the years 2016 through 2019 ending November 30, Goldman Sachs compared the projected Adjusted EPS of IHS common stock and the projected Adjusted EPS of Markit common stock, in each case, on a standalone basis, to the projected Adjusted EPS of the pro forma combined company. This analysis indicated the combination would be accretive to the holders of shares of IHS common stock on an Adjusted EPS basis in each of the years 2017 through 2019 ending November 30.

Selected Companies Analysis

Goldman Sachs reviewed and compared certain financial information, ratios and public market multiples for IHS and Markit to corresponding financial information, ratios and public market multiples for the following publicly traded corporations in the information services industry:

Financial:

 

    FactSet Research Systems Inc.;

 

    MSCI Inc.;

 

    Moody’s Corporation;

 

    McGraw Hill Financial, Inc.; and

 

    Thomson Reuters Corporation.

 

92


Table of Contents

Subscription:

 

    Gartner, Inc.;

 

    Verisk Analytics, Inc.;

 

    Nielsen Holdings plc;

 

    IMS Health Holdings, Inc.; and

 

    The Dun & Bradstreet Corporation.

Although none of the selected companies is directly comparable to IHS or Markit, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of IHS and Markit.

Goldman Sachs also calculated and compared various financial multiples and ratios for IHS, Markit and the selected companies. The multiples and ratios for each of IHS, Markit and the selected companies were calculated using the closing price of the respective company’s common stock on March 17, 2016. The multiples and ratios for each of IHS, Markit, and each of the selected companies were based on the most recent publicly available data and the Forecasts and Institutional Brokers’ Estimate System (“IBES”) estimates.

Goldman Sachs calculated for the selected companies, IHS and Markit: (i) the enterprise value (“EV”), which is the market value of common equity as of March 17, 2016 plus net debt as of the latest available balance sheet of each respective company, as a multiple of estimated Adjusted EBITDA for 2016 (“EV/2016E Adjusted EBITDA”); (ii) the price to earnings ratio calculated using estimated adjusted earnings for 2016 (“2016E Adjusted P/E”); (iii) the price to free cash flow ratio (“P/2016E FCF”) calculated using estimated free cash flow (“FCF”), which is the Adjusted EBITDA less the capital expenditures of each respective company, for 2016; and (iv) the proportion of the price to earnings ratio to the compounded annual growth rate of adjusted earnings per share for 2016 to 2018 (“2016E Adjusted P/E/G”). For purposes of calculating median values, IHS and Markit were excluded. For IBES estimates, price to earnings ratio calculations are calculated using per share data for both the share price and net income. For purposes of all calculations referred to above, all figures were calendarized to November. The following table presents the results of these analyses:

 

    Financial     Subscription     IHS     Markit     IHS     Markit  
    Range     Median     Range     Median     (IBES)     (IBES)     (Forecasts)     (Forecasts)  

EV/2016E Adjusted EBITDA

    12.0x-15.9x        12.7x        10.7x-16.8x        13.6x        13.7x        12.0x        13.4x        12.4x   

2016E Adjusted P/E

    19.1x-25.6x        20.5x        14.2x-32.4x        18.5x        17.9x        19.6x        18.1x        21.0x   

P/ 2016E FCF

    9.7x-14.1x        11.4x        7.8x-13.4x        10.5x        9.8x        13.3x        9.2x        12.5x   

2016E Adjusted P/E/G

    1.3x-2.3x        1.6x        1.2x-1.9x        1.7x        1.5x        2.9x        1.1x        1.6x   

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to IHS or Markit or the contemplated combination.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the IHS board as to the fairness from a financial point of view to the holders (other than Markit and its affiliates) of shares of IHS common stock of the exchange ratio pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may

 

93


Table of Contents

be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of IHS, Markit, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The exchange ratio was determined through arm’s-length negotiations between IHS and Markit and was approved by the IHS board. Goldman Sachs provided advice to IHS during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio to IHS or the IHS board or that any specific exchange ratio constituted the only appropriate exchange ratio for the combination.

As described above, Goldman Sachs’ opinion to the IHS board was one of many factors taken into consideration by the IHS board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex D.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of IHS, Markit, any of their respective affiliates and third parties, including General Atlantic LLC (“GA”), Temasek Holdings Private Limited (“Temasek”) and CPP Investment Board Inc. (“CPPIB”), each an affiliate of a significant shareholder of Markit, and any of their respective affiliates and portfolio companies, including the Republic of Singapore, an affiliate of Temasek, and its agents or instrumentalities, or any currency or commodity that may be involved in the combination. Goldman Sachs has acted as financial advisor to IHS in connection with, and has participated in certain of the negotiations leading to, the combination. Goldman Sachs has provided certain financial advisory and/or underwriting services to IHS and/or its affiliates from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as manager with respect to a public offering of IHS’s 5% Notes due November 2022 (aggregate principal amount $750,000,000) in October 2014. During the two year period ended March 20, 2016, Goldman Sachs has received compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to IHS and/or its affiliates of approximately $254,897. Goldman Sachs has provided certain financial advisory and/or underwriting services to Markit and/or its affiliates from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as book running manager with respect to an initial public offering of 53,472,353 Markit common shares in June 2014 and book running manager with respect to a public offering of 25,746,604 Markit common shares in June 2015. During the two year period ended March 20, 2016, Goldman Sachs has received compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Markit and/or its affiliates of approximately $5,854,568. Goldman Sachs has provided certain financial advisory and/or underwriting services to GA and/or its affiliates and portfolio companies from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as manager with respect to a public offering of 5.870% Senior Notes due 2022 (aggregate principal amount $300,000,000) for Quality Technology Services Inc., a portfolio company of GA, in July 2014; as book running manager with respect to a public offering of 9,350,000 shares of common stock of Quality Technology Services Inc., in February 2015; as financial advisor to MedExpress Urgent Care PLLC, a portfolio company of GA, in connection with its sale in April 2015; as book running manager with respect to a public offering of 7,000,000 shares of common stock of Quality Technology Services Inc. in June 2015; as financial advisor to TE Connectivity Ltd., a portfolio company of GA, in connection with the sale of Network Solutions LLC, a subsidiary of TE Connectivity Ltd., in August 2015; and as financial advisor to Amedes Holding AG, a portfolio company of GA, in connection with its sale in August 2015. Goldman Sachs has provided certain financial

 

94


Table of Contents

advisory and/or underwriting services to Temasek and/or its affiliates and portfolio companies from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as book running manager with respect to a public offering of 15,000,000 shares of common stock of Quintiles Transnational Corporation, a portfolio company of Temasek, in March 2014; as book running manager with respect to a public offering of 78,000,000 shares of common stock of New China Life Insurance Co. Ltd., a portfolio company of Temasek, in July 2014; as book running manager with respect to a public offering of 35,000,000 shares of common stock of Shanghai Pharmaceuticals Holdings Co., Ltd., a portfolio company of Temasek, in March 2015; and as book running manager with respect to a public offering of 15,000,000 shares of common stock of Evonik Industries AG, a portfolio company of Temasek, in June 2015. Goldman Sachs has provided certain financial advisory and/or underwriting services to the Republic of Singapore and its agents or instrumentalities and their respective affiliates from time to time for which its Investment Banking Division has received, and may receive, compensation. Goldman Sachs has provided certain financial advisory and/or underwriting services to CPPIB and/or its affiliates and portfolio companies from time to time for which its Investment Banking Division has received, and may receive, compensation, including having acted as joint lead arranger in connection with a bank loan facility (aggregate principal amount $3,772,000,000) for IMS Health Inc., a portfolio company of CPPIB, in March 2014; as financial advisor to CPPIB in connection with the acquisition of Wilton Re in June 2014; as joint lead arranger in connection with a bank loan facility (aggregate principal amount $2,761,000,000) for Gates Global Inc., a portfolio company of CPPIB, in June 2014; as financial advisor to Gates Global Inc. in connection with its sale in July 2014; as book running manager with respect to a public offering of 51,000,000 shares of common stock of IMS Health Holdings, Inc., a portfolio company of CPPIB, in May 2015; and as financial advisor to CPPIB in connection with the acquisition of Informatica Corporation in August 2015. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to IHS, Markit, GA, Temasek and CPPIB, and their respective affiliates and portfolio companies, for which its Investment Banking Division may receive compensation. Affiliates of Goldman Sachs also may have co-invested with GA, Temasek and CPPIB and their respective affiliates from time to time and may have invested in limited partnership units of affiliates of GA, Temasek and CPPIB from time to time and may do so in the future.

The board of directors of IHS selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the combination. Pursuant to a letter agreement dated March 14, 2016, IHS engaged Goldman Sachs to act as its financial advisor in connection with the contemplated merger. Pursuant to the terms of this engagement letter, IHS has agreed to pay Goldman Sachs a transaction fee of $3.5 million, which may be increased in an amount to be determined by IHS in its sole discretion, $1 million of which became payable upon execution of the merger agreement on March 20, 2016 and the remainder of which is payable upon consummation of the merger. In addition, IHS has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Interests of Markit Directors and Executive Officers in the Merger

In considering the recommendation of the Markit board that you vote to approve the Markit share issuance proposal, the Markit amended bye-laws proposal and the Markit name change, you should be aware that Markit’s directors and executive officers have certain financial interests in the merger that may be different from, or in addition to, those of Markit shareholders generally. The Markit board was aware of and considered these potential interests, among other matters, in approving the merger agreement and in recommending to the Markit shareholders that the Markit shareholders vote to approve the Markit share issuance, the Markit amended bye-laws and the Markit name change. These interests are further described below.

These interests include that certain of Markit’s current directors and executive officers will continue to serve as directors and executive officers of the combined company following the consummation of the merger, as discussed in more detail in “—Employment Arrangements Following the Merger” below and the section entitled “—Certain Governance Matters Following the Merger” on page 101.

 

95


Table of Contents

Outstanding Equity Awards

Markit’s directors and executive officers hold Markit stock options, restricted stock and/or restricted stock unit awards, which will remain outstanding and will continue to vest in accordance with their terms following the closing.

Pursuant to amendments adopted by the Markit board in connection with the execution of the merger agreement to Markit’s Key Employee Incentive Program, which we refer to as the KEIP, and Markit’s 2014 Equity Incentive Award Plan, which we refer to as the 2014 Equity Plan, if a participant is terminated without “cause” or for members of Markit’s executive committee, resigns for “good reason”, within 12 months after the closing, generally, all unvested equity awards will vest and, in the case of options, remain exercisable for a period of 12 months.

The following table sets forth the number of Markit stock options, restricted stock and restricted stock units held by each executive officer and director of Markit as of May 31, 2016. The following table assumes that Markit’s executive officers and directors will not sell or acquire any Markit common shares or equity awards following such date.

 

     Stock Options(1)      Unvested
Restricted Stock
     Unvested
Restricted Stock
Units
 

Name

   Vested      Unvested                

Executive Officers

           

Lance Uggla

     91,820         5,000,000         402,944         0   

Kevin Gould

     73,950         1,995,000         76,327         0   

Jeffrey Gooch

     535,820         1,250,000         75,345         0   

Shane Akeroyd

     932,250         1,250,000         65,706         0   

Stephen Wolff

     400,000         600,000         40,172         0   

Non-Executive Directors

           

Edwin D. Cass

     0         0         0         0   

Gillian H. Denham

     0         0         0         2,856   

Dinyar S. Devitre

     0         0         2,856         0   

William E. Ford

     0         0         0         0   

Timothy J.A. Frost

     0         0         2,856         0   

Robert P. Kelly

     0         0         3,570         0   

James A. Rosenthal

     0         0         0         0   

Cheng Chih Sung

     0         0         0         0   

Anne Walker

     0         0         0         0   

 

(1) As of March 31, 2016 the weighted average exercise price of all unvested stock options held by Markit executive officers was $20.35.

Markit is a party to an employment agreement with the following executive officers: Lance Uggla, Kevin Gould, Jeffrey Gooch, Shane Akeroyd and Stephen Wolff, which we refer to as the executive employment agreements.

Pursuant to the executive employment agreements, upon a termination of the executive officer’s employment without “cause” or a resignation for “good reason” (each as defined in the applicable executive employment agreement), the executive officer is entitled to receive one month of base salary and target bonus for each year of service up to a total of 12 months (payable monthly in equal installments). In addition, if such termination occurs within 12 months after a change in control (which would include the consummation of the merger), the executive officer would be entitled to an additional one times current base salary and target bonus (payable monthly in equal installments). Mr. Uggla would also be entitled on such a termination to a continuation

 

96


Table of Contents

of his car and housing allowance, dining club membership, tax preparation services and home leave for a period of 12 months. Each executive employment agreement contains 12-month employee and customer non-solicitation and non-compete restrictions.

The aggregate value of the severance amounts (excluding the value of equity awards) that would be payable to Markit’s executive officers in connection with a qualifying termination within 12 months of the closing (assuming such termination occurred on May 10, 2016), would be $12,395,597. However, these amounts are estimates based on multiple assumptions that may or may not actually occur or be accurate as of the dates referenced. As a result, the actual amounts, if any, that may be paid or become payable may materially differ.

Amendment to Lance Uggla’s Employment Agreement

In connection with Lance Uggla’s appointment as President of the combined company, Mr. Uggla’s executive employment agreement was amended to provide that if he is not serving as the Chief Executive Officer and Chairman of the combined company by January 1, 2018, he may resign in which case he would be entitled to receive the same change in control severance (described above under “—Change in Control Severance Rights Under Executive Officer Employment Agreements”) and equity award vesting (described above under “—Outstanding Equity Awards”) he would have received if he was terminated without cause or resigned for good reason within 12 months of the closing. In addition, stock options granted to Mr. Uggla under the KEIP would fully vest on the first anniversary of his termination (subject to compliance with the 12-month employee and customer non-solicitation and non-compete restrictions in his executive employment agreement) and would remain exercisable for the remainder of their original term.

Employment Arrangements Following the Merger

Upon completion of the merger, Jerre Stead, the current Chief Executive Officer of IHS, will serve as Chairman and Chief Executive Officer of the combined company and Lance Uggla, the current Chief Executive Officer of Markit, will serve as President of the combined company. If, as of the effective time, Mr. Stead is unwilling or unable to serve as Chairman and Chief Executive Officer of the combined company, Mr. Uggla will serve as Chairman and Chief Executive Officer.

Potential Markit Compensation Actions Between Signing of the Merger Agreement and Completion of the Mergers

The terms of the merger agreement permit Markit to take certain compensation actions prior to the completion of the merger that could benefit Markit’s executive officers, including allocating amounts under a $12.5 million retention pool or granting off-cycle equity incentive awards (other than Markit stock options) of up to 500,000 Markit common shares under the Markit equity plans. Markit does not anticipate granting retention awards to its executive officers and is still determining whether any of its executive officers will receive off-cycle grants of equity incentive awards.

Interests of IHS Directors and Executive Officers in the Merger

In considering the recommendation of the IHS board that you vote to approve the IHS merger proposal, you should be aware that IHS’s directors and executive officers have certain financial interests in the merger that may be different from, or in addition to, those of IHS stockholders generally. The IHS board was aware of and considered these potential interests, among other matters, in approving the merger agreement and in recommending to the IHS stockholders that the IHS stockholders vote to approve the adoption of the merger agreement.

These interests include that certain of IHS’s current directors and executive officers will continue to serve as directors and executive officers of Parent following the consummation of the merger, as discussed in more detail in the section entitled “—Certain Governance Matters Following the Merger” on page 101.

 

97


Table of Contents

Treatment of Outstanding Equity Awards

As further described under “—Treatment of IHS Equity Awards,” on page 118, under the merger agreement, IHS equity awards, including awards held by IHS directors and executive officers, will be converted to corresponding equity awards on a number of IHS Markit common shares calculated using the exchange ratio. The merger shall not constitute a “change in control” under the Amended and Restated IHS Inc. 2004 Long-Term Incentive Plan. Accordingly, the closing of the merger alone will not trigger any accelerated vesting of awards outstanding under the plan, including with respect to awards held by IHS directors and executive officers.

Any deferred stock units held by a non-employee director who does not continue as a director of the combined company (to be determined) following the effective time of the merger will be settled on the 10th day following such director’s termination of service, under the terms of the applicable award agreements. In addition, as described further below under “—Severance Protections in the Merger,” an executive officer’s outstanding equity awards may be subject to accelerated vesting provisions in the event of certain terminations of employment following the closing of the merger, under the terms of the applicable arrangements.

The two tables below sets forth the number of shares of IHS common stock underlying outstanding equity awards held by IHS’s non-employee directors and executive officers as of May 31, 2016 (based on target levels of performance for IHS PSU Awards). The table also sets forth the value of these awards, assuming a price per share of $122.22, the average per share closing price of IHS common stock over the first five business days following the March 21, 2016 public announcement of the merger agreement.

Non-Employee Director Equity Awards

 

Name

   RSUs (#)      RSUs ($)      DSUs (#)      DSUs ($)      Total ($)  

Ruann F. Ernst

     1,452       $ 177,463         15,450       $ 1,888,299       $ 2,065,762   

Christoph von Grolman

     1,452       $ 177,463         11,844       $ 1,447,574       $ 1,625,037   

Brian H. Hall

     1,452       $ 177,463         27,888       $ 3,408,471       $ 3,585,934   

Roger Holtback

     1,452       $ 177,463         25,157       $ 3,074,689       $ 3,252,152   

Balakrishnan S. Iyer

     1,452       $ 177,463         16,539       $ 2,021,397       $ 2,198,860   

Deborah Doyle McWhinney

     1,452       $ 177,463         1,980       $ 241,996       $ 419,459   

Jean-Paul Montupet

     1,452       $ 177,463         6,173       $ 754,464       $ 931,927   

Richard W. Roedel

     1,452       $ 177,463         35,082       $ 4,287,722       $ 4,465,185   

Executive Officer Equity Awards

 

Name

  RSUs (#)     RSUs ($)     DSUs (#)     DSUs ($)     PSUs (#)     PSUs ($)     Total ($)  

Jerre Stead

(Chairman & Chief Executive Officer)

    —          —          1,617      $ 197,630        80,000      $ 9,777,600      $ 9,975,230   

Todd Hyatt

(EVP & Chief Financial Officer)

    7,000      $ 855,540            37,000      $ 4,522,140      $ 5,377,680   

Daniel Yergin

(Vice Chairman)

    81,000      $ 9,899,820            46,000      $ 5,622,120      $ 15,521,940   

Jonathan Gear

(EVP, Resources & Transportation)

    10,200      $ 1,246,644            35,200      $ 4,302,144      $ 5,548,788   

Anurag Gupta

(EVP, Consolidated Markets & Solutions)

    15,200      $ 1,857,744            25,200      $ 3,079,944      $ 4,937,688   

Other executive officer

    1,500      $ 183,330            8,500      $ 1,038,870      $ 1,222,200   

 

98


Table of Contents

Severance Protections in the Merger

Other than for Mr. Stead, IHS maintains employment agreements or offer letters with each of its named executive officers (“IHS NEOs”) pursuant to which they are entitled to the following payments and benefits upon a (x) termination of employment by IHS without cause or (y) resignation for “good reason,” in each case within 15 months following a change in control:

 

    A lump sum severance payment equal to two times the sum of the officer’s annual base salary and target annual bonus;

 

    A lump sum payment of the officer’s target annual bonus prorated for the year of termination;

 

    Continuation of health and welfare benefits for 24 months following termination of employment; and

 

    Full vesting of all outstanding equity awards.

The HR Committee approved a framework for an executive severance and transition program, which we refer to as the “Executive Severance and Transition Framework,” for specified employees, including NEOs, to be implemented on an individual basis as future roles in connection with the transition to the combined company are determined. Under the Executive Severance and Transition Framework, a participant would be entitled to the severance payments and benefits that are consistent with those provided under the IHS employment agreements described above, in the event of the participant’s (x) termination of employment by IHS without cause or (y) resignation for “good reason” (each, a “Qualifying Termination”), generally within 24 months following the closing of the merger.

Transitional Equity Awards

The HR Committee approved transitional equity awards for specified employees, including certain IHS NEOs, to be granted in the form of IHS PSU Awards in shares of IHS common stock, contingent upon the closing of the merger.

Transition Cash Awards

The terms of the merger agreement permit IHS to take certain compensation actions prior to the closing of the merger that may affect IHS NEOs, including granting transition awards under a framework approved by the HR Committee. Any award granted to an IHS NEO will be equal to one times such NEO’s annual base salary, payable in cash. Other applicable terms of the program have not yet been decided, and it has not yet been determined whether any IHS NEOs will participate in the transition award program.

Other IHS Executive Officers

IHS’s chief accounting officer, its other executive officer (besides an IHS NEO), is eligible for (i) a severance arrangement that provides for cash severance (equal to annual base salary, annual target bonus and pro rata target bonus), 12 months of health and welfare benefits, full vesting of outstanding equity awards and 12 months of outplacement services, in the event of a Qualifying Termination occurring generally within 24 months following the closing of the merger, and (ii) a retention bonus plan award equal to one times annual base salary, a portion of which is payable upon the closing of the merger and a portion payable on March 21, 2017, subject to the officer’s continued employment through such dates. The value of the foregoing arrangements total $2,558,293, based on the same assumptions described below under “—Merger Related Compensation—IHS.”

Potential Employment Arrangements Following the Merger

It is anticipated that certain current executive officers of IHS will have positions as executive officers of IHS Markit. Subject to the terms of the merger agreement, certain of the current IHS executive officers could, prior to the consummation of the merger, enter into new employment agreements or incentive compensation arrangements with IHS or Markit.

 

99


Table of Contents

Indemnification, Exculpation and Insurance of IHS Directors and Officers

The merger agreement requires Markit to cause IHS, as the surviving corporation in the merger, to indemnify and hold harmless each individual who is as of the date of the merger agreement or becomes prior to the effective time, a director or officer of IHS and any of its subsidiaries, and each person who was serving as a director or officer of another person at the request of IHS and any of its subsidiaries, each referred to as an indemnified party, to the same extent as such indemnified parties were indemnified as of the date of the merger agreement pursuant to the organizational documents of IHS or any of its subsidiaries, or any indemnification agreements in existence as of the date of the merger agreement.

The merger agreement also requires Markit to cause IHS, as the surviving corporation in the merger, to maintain for six years following the merger either the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance currently maintained by IHS and any of its subsidiaries or provide substitute policies for not less than the existing coverage and having other terms not less favorable to the insured persons, except that in no event will the annual cost to IHS for maintaining such policies exceed 300% of the annual premium paid by IHS, referred to as the maximum amount. IHS may obtain a six-year “tail” policy under its existing directors and officers insurance policy in lieu of the foregoing, for a cost not to exceed the maximum amount.

Merger Related Compensation—IHS

The following table contains the information required by Item 402(t) of Regulation S-K setting forth the estimated amounts of compensation and benefits that IHS NEOs could receive that are based on or otherwise relate to the merger. The information in the table assumes that (1) each NEO has entered into a definitive arrangement pursuant to the Executive Severance and Transition Framework described above, (2) the merger was completed on May 31, 2016 (the latest practicable date prior to the date hereof, pursuant to Item 402(t) of Regulation S-K) and (3) the employment of each NEO was terminated without cause on the same day.