IHS Inc. (IHS) announced an agreement to acquire R.L. Polk & Co. in a $1.4 billion transaction. Polk is a provider of automotive information and marketing solutions. IHS said it expects the acquisition to be significantly accretive to its 2014 earnings per share, excluding purchase price amortization.
Polk is based in Southfield, Michigan, with operations in Australia, Canada, China, France, Germany, Italy, Japan, South Korea, Spain, the United Kingdom and the United States.
IHS Chief Financial and IT Officer Todd Hyatt said, "R.L. Polk is a significant, scaled asset with approximately $400 million in annual revenues, growing at mid to high single digits. 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."
IHS will fund the acquisition with 10 percent equity and the remainder with cash on hand, cash from an existing revolver and a new bank term loan.
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