ENGLEWOOD, Colo. -

IHS president and chief executive officer Scott Key explained why the company viewed Carfax parent company R.L. Polk & Co., as so valuable that he went into an auction-style bidding process to make the acquisition.

Key’s strategic moves paid off as IHS gained a definitive agreement to buy Polk in a $1.4 billion transaction.

“As you know, we try to avoid auctions at all costs,” Key told investment analysts during a conference call on Monday morning.

“We usually are well ahead of them because we pursue assets in a strategic way. In fact, we had done the same with R.L. Polk, but it did end up in an auction process with, I would say, a relatively large number of very interested parties,” he continued.

“I think the synergies and the opportunity was pretty clear,” Key went on to say. “I think it made great sense for Polk and for IHS and we ended up prevailing at really an attractive purchase price that allows us to create some great value for shareholders and customers.”

The company pointed out the deal must first go through customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. But once Carfax and Polk are in its portfolio, IHS highlighted why the relationships with dealers and automakers make the acquisition so valuable.

“As Scott mentioned, (Carfax) has a tremendous brand as far as pulling in the end user and driving demand for the product,” said Jonathan Gear, IHS’ senior vice president of industrials. “However, the consumer who actually pays the bills is the dealer. For the dealer, what it enables for them and for the franchise is the ability to rapidly make a highly complex transaction between themselves and their customers, the consumer. Dealers love the Carfax brand. They love promise of quality that it provides and how it enables the sale.”

Key reiterated those points, elaborating about what Carfax Vehicle History Reports mean to the used-vehicle industry.

“It’s an incredible (business-to-consumer) brand and hugely recognized as the leader in this market. But what’s so compelling about the asset is the majority of its revenue is derived from (business-to-business) activities. Providing information to dealers and OEMs is from the analytics we get from this B-to-C presence,” Key said.

The data Polk and Carfax bring is what Key described as “most exciting” about Monday’s acquisition announcement.

“Never before have we been able to connect production and manufacturing, which is where IHS’ expertise is, to sales and registration data, which is where Polk’s great global presence is, to then the aftermarket knowledge of what happens with the performance of the vehicle,” Key said.

“So imagine the analytics you can create on a performance all the way into the aftermarket of what parts are needed when and where, in what geographies and what volumes, based on the vehicle history and performance,” he continued.

“We’re very excited about the analytics that will be sold back to OEMs and the supply chain in understanding the full supply chain in automotive. That’s not been done before.”

And no matter how the industry ebbs and flows, Key issued strong confidence to Wall Street about how this was a prudent move by IHS.

“What’s interesting about our business as well as Polk is that the need for information and insight actually rises with volatility and change,” Key said. “We have not seen a lot of cyclicity with the business, nor seasonality. What we see is very consistent strong solid double-digit growth rates at Carfax. We do see in Polk as the major OEMs came out of a very serious recession, downturn and restructure in 2008 and 2009, there was some impact there, but we know a lot of that was driven by bankruptcies and other changes.

“What I would say it’s very much like our energy asset with great proprietary data that are tied more to the need for the information and insight as the markets change as opposed to cyclicity and ups and downs,” he went on to say.

Auto Remarketing’s breaking news report about the acquisition can be found here.

Nick Zulovich can be reached at nzulovich@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.