Information and data firm IHS says it has reached a definitive agreement to acquire automotive data vendor RL Polk & Co.
It says that the US$1.4bn transaction will be funded with 10% equity and the remainder with cash on hand, cash from an existing revolver and a new bank term loan.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“The acquisition of RL 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 Chief Executive Officer Scott Key. “RL Polk has a long history of providing critical information to the automotive industry,” he said.
“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.”
RL Polk consists of two divisions – Polk and CARFAX. Polk is described as providing “mission-critical market data, analysis and tools for the entire automotive ecosystem” and is best know for parc and sales data.
CARFAX provides consumers and automotive dealers with vehicle history information to enhance used vehicle purchase and sales decisions. This division is the primary source of vehicle history information for cars operating in the US and Canada.
The products and services offered by RL 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 US asset, CARFAX, that can be replicated in other geographies to take advantage of the expected high growth in worldwide used car markets.
“The continued growth and transformation of the automotive industry through the next decade, led by global growth in light vehicle demand, technological changes and the transformation of the OEM supply chain, will fuel strong growth in demand for data, research and analytics to support investment decisions,” Key said. “IHS has successfully acquired and integrated more than 50 acquisitions since 2007. We look forward to combining RL Polk’s market-leading information with IHS Automotive’s industry-leading forecasts and insights to create new efficiencies for customers and reduce decision times.”
IHS Chief Financial and IT Officer Todd Hyatt said RL Polk brings to IHS an attractive financial profile and accretive growth trajectory. “RL Polk is a significant, scaled asset with approximately $400 million in annual revenues, growing at mid to high single digits,” Hyatt said. “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 RL Polk & Co., said: “We’re excited about the opportunities this acquisition would offer RL 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.”
The company was founded by Ralph Lane Polk in 1870 and began operations as an “enumerated directory publishing firm”. According to the company’s website, its first gazetteer contained the names of 17,500 residents and 600 professionals and trades people along the Detroit and Milwaukee railway.
