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Markit chief executive Lance Uggla (third from left) celebrates during the company's market debut at the Nasdaq stock market in New York June 19, 2014.© Adrees Latif / Reuters

Lance Uggla finally hit his goal of $10-billion (U.S.) – and then some – on Monday, when the financial data company he created, Markit Ltd., announced a merger with American information and analytics powerhouse IHS Inc.

Mr. Uggla, Markit's hard-charging Canadian chief executive officer, founded Markit in a barn north of London in 2003, and predicted his creation would reach a valuation of $10-billion in the early part of this decade; he even kept an easel in his office with a big "10" scrawled on it.

Markit didn't make it. Its initial public offering in 2014, on the Nasdaq Stock Market, valued it at $4.3-billion.

But Markit's merger with IHS will value the new group, to be called IHS Markit, at almost $13-billion, more than fulfilling his ambitions. After the merger was announced, Markit shares shot up 11 per cent, giving it a value of $5.2-billion. IHS gained 6.5 per cent, taking it to $7.5-billion.

"I was born in Vancouver to a humble background and it's amazing to have a $13-billion company," Mr. Uggla, 54, a former employee of TD Securities, said in a phone interview. "I am so proud and it means a lot to Canada. The new company will have a big Canadian footprint across several platforms."

The merger will thrust Mr. Uggla into the information-and-data big leagues by creating a transatlantic information giant that will overlap Bloomberg and Thomson Reuters in a few areas, though the specialized niche products published by Markit and IHS will ensure that the enlarged group is unlikely to become a direct competitor to either Bloomberg or Thomson Reuters.

Markit, among other services, compiles indexes for financial products, among them credit default swaps. It is probably best known for its PMI – purchasing managers index – one of the most widely followed indicators of momentum, or lack thereof, in the real economy. IHS, which is based in Englewood, Colo., publishes information on the energy, transportation and technology markets, among others.

IHS sponsors IHS CERAWeek, one of the world's biggest annual energy conferences, whose chairman is Daniel Yergin, the Pulitzer Prize-winning energy author.

The deal was billed as a merger of equals, though the all-share transaction will see shareholders of the bigger IHS own 57 per cent of the new company, with Markit shareholders owning the rest. Based on fiscal 2015's results, the new company would have $3.3-billion in revenue and $1.2-billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

The merger is not technically a corporate tax inversion, but has some of the characteristics of one. By moving to Britain, IHS will be able to avoid U.S. taxes and pay relatively lower British taxes. Britain's corporate tax rate is at least 10 percentage points lower than the 35-per-cent rate in the United States.

While IHS shareholders have the upper hand on ownership, it is Mr. Uggla who will emerge on top of the executive ranks. Mr. Uggla will become CEO and chairman when Jerre Stead, who has both those roles at IHS, retires at the end of next year.

Mr. Uggla said the merger will create a "multi-industry, multifootprint information powerhouse."

He and Mr. Stead were introduced by an investor who has holdings in both Markit and IHS. "We talked every day over Christmas, and in January, we decided to put the two companies together," Mr. Uggla said.

Markit and IHS do not have overlapping businesses, which they consider a strength because they will gain access to each other's clients in financial services and among Fortune 500 companies and governments.

Mr. Uggla said the two companies can create "index overlays" to enrich each other's data. For instance, IHS tracks ship movements and their cargoes. An overlay of, say, Markit's China's PMI onto the IHS shipping data would give users of the data additional information on China's exports, imports and general economic health.

In Canada, IHS compiles data on oil and gas activity, such as drilling. Markit could complement that data by adding debt and equity valuation services of the Canadian companies doing the drilling, which would be of interest to investors or companies considering making acquisitions in the Canadian oil sector. "This is about using unique content to develop unique indicators," Mr. Uggla said.

Mr. Uggla began his career at CIBC World Markets (then Wood Gundy) in 1986. In 1995, he joined TD Securities, where he was responsible for the foreign-debt capital markets business and soon landed in London, where he ran TD's global credit trading operations and built a database on credit price. As the database expanded, he seized upon the idea of using it to create a standalone company. TD put up $17-million in startup capital for Markit, which began in 2003 with 10 employees in little St. Albans, England.

Today, it has more than 4,000 employees in 11 countries. Markit has about 75 employees in its Vancouver, Calgary and Toronto offices.

Mr. Uggla has used acquisitions to build Markit and said the enlarged company would have ample free cash flow to fund other deals. "I will keep building," he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 4:00pm EDT.

SymbolName% changeLast
CM-N
Canadian Imperial Bank of Commerce
-0.46%50.07
CM-T
Canadian Imperial Bank of Commerce
+0.67%67.9
IHS-N
IHS Holding Ltd
+0.26%3.85
TRI-N
Thomson Reuters Corp
+0.55%155.95
TRI-T
Thomson Reuters Corp
+0.41%211.67

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