The proposed merger of S&P Global and financial data giant IHS Markit has been challenged at Court. A couple of similar actions concerning the deal were brought in US Courts on February 25, 2021. One of them is brought by James Parshall, a stockholder of IHS Markit.
His complaint, filed with the New York Southern District Court, targets IHS Markit Ltd and the members of its Board of Directors. They are accused of violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(a), 78t(a), and U.S. Securities and Exchange Commission (“SEC”) Rule 14a-9, 17 C.F.R. § 240.14a-9. These alleged violations arise out of IHS Markit’s attempt to merge with S&P Global Inc., through its wholly owned subsidiary Sapphire Subsidiary, Ltd.
On November 30, 2020, IHS Markit announced that it had entered into an Agreement and Plan of Merger pursuant to which, each IHS Markit stockholder will receive 0.2838 shares of S&P Global common stock for each share of IHS Markit common stock they own.
On January 22, 2021, IHS Markit filed a Schedule 14A Definitive Proxy Statement with the SEC. According to the plaintiffs, the Proxy is materially deficient and misleading because, inter alia, it fails to disclose material information regarding: (i) IHS Markit’s and S&P Global’s financial projections; (ii) the financial analyses performed by Morgan Stanley & Co. LLC; and (iii) Morgan Stanley’s potential conflicts of interest.
For example, the Proxy fails to disclose the line items underlying the unlevered free cash flows for each of the S&P Global Projections for S&P Global, S&P Global Projections for IHS Markit, S&P Global Projections for the Combined Company, IHS Markit Projections for IHS Markit, and IHS Markit Projections for S&P Global.
Also, regarding the S&P Global Projections for S&P Global and the IHS Markit Projections for S&P Global, the Proxy fails to disclose adjusted EBITDA.
Furthermore, with respect to the S&P Global Projections for IHS Markit, the Proxy fails to disclose: (i) adjusted net income; and (ii) adjusted diluted EPS. With respect to Morgan Stanley’s S&P Global Discounted Cash Flow Analysis, the Proxy fails to disclose: (i) S&P Global’s terminal value; (ii) the inputs and assumptions underlying the discount rates ranging from 5.53% to 6.96%; and (iii) the number of fully diluted outstanding shares of S&P Global common stock.
The plaintiff notes that the stockholder vote to approve the proposed transaction is forthcoming. Under the Merger Agreement, following a successful stockholder vote, the proposed transaction will be consummated.
The plaintiff seeks that the Court preliminarily and permanently enjoin the defendants and all persons acting in concert with them from proceeding with, consummating, or closing the proposed Transaction and any vote on the proposed Transaction.
Also, in the event defendants consummate the proposed transaction, the plaintiff asks that the Court orders rescinding it and setting it aside or awarding rescissory damages to the plaintiff.
In addition, the plaintiff asks the Court to direct the members of IHS Markit’s Board to disseminate an S-4 that does not contain any untrue statements of material fact and that states all material facts required in it or necessary to make the statements contained therein not misleading.
Finally, the plaintiff asks the Court to declare that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act, as well as SEC Rule 14a-9 promulgated thereunder.