IHS to Acquire R.L. Polk & Co. for $1.4B
IHS signs definitive agreement to acquire the market research firm and its subsidiary, Carfax. The addition of Polk would put IHS at center of today’s most critical business decisions for the automotive industry.
ENGLEWOOD, Colo. — IHS Inc., a global research firm, has signed a definitive agreement to acquire R.L. Polk & Co. for $1.4 billion. The transaction will be funded with 10 percent equity and the remainder with cash on hand, cash from an existing revolver and a new bank term loan.
The acquisition is subject to customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“The acquisition of R.L. Polk brings extensive and complementary information and analytical solutions that would establish IHS as a vital strategic partner of the global automotive value chain,” said IHS President and CEO Scott Key. “R.L. Polk has a long history of providing critical information to the automotive industry. The combination with IHS Automotive creates a comprehensive capability that will significantly enhance customers’ insights and decision processes across the full vehicle lifecycle with analytics from product planning through manufacturing, sales and into automotive aftermarkets.”
R.L. Polk consists of two divisions — Polk and CARFAX — that provide market intelligence, powerful tools and analytics and extensive vehicle history data. Polk provides mission-critical market data, analysis and tools for the entire automotive ecosystem, while CARFAX serves as the primary source of vehicle history information for cars operating in the United States and Canada.
The products and services offered by R.L. Polk, Key said, are “complementary to existing IHS Automotive solutions and open up large adjacent markets.” The acquisition, he said, would also provide IHS with a high-growth U.S. asset, CARFAX, that can be replicated in other geographies to take advantage of the expected high growth in worldwide used-car markets.
“R.L. Polk is a significant, scaled asset with approximately $400 million in annual revenues, growing at mid- to high-single digits,” said Todd Hyatt, HIS chief financial and IT officer. “Approximately 75 percent of its overall revenue is recurring in nature, with approximately 90 percent renewal rates, attractive margins and high levels of free cash flow conversion.
“Polk has an adjusted EBITDA margin in the mid-20 percent range and we see a clear path to drive the business to an accretive margin level within the next six to eight quarters,” Hyatt added. “Most importantly, like IHS, this is an asset that creates high levels of free cash flow and the combination creates an impressive free cash flow engine at IHS going forward as the basis of solid shareholder value creation. We have secured attractive financing and we expect the acquisition to be significantly accretive to 2014 earnings per share, excluding purchase price amortization, which is indicative of the transaction’s value.”
Stephen Polk, chairman, president and CEO of R.L. Polk & Co., said: “We’re excited about the opportunities this acquisition would offer R.L. Polk clients by supporting solutions and analytics for our more than 30,000 customers worldwide. The IHS global reach would expand the unique and vital role we’ve played in the auto industry over all these years, helping stakeholders across the value chain – from manufacturers to consumers and a range of service providers in between – to function more intelligently and efficiently.”
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