MSCI Inc. and RiskMetrics Group, Inc. (NYSE: RISK) have jointly announced that they have entered into a definitive merger agreement whereby MSCI will acquire RiskMetrics in a cash and stock transaction valued at $21.75 per share based on MSCI's closing price of $29.98 per share on Friday, February 26, 2010, or approximately $1.55 billion.
The combined company would have approximately $750 million of revenues and approximately 2,000 employees across 20 countries.
MSCI's offer consists of $16.35 in cash and 0.1802 shares of MSCI per share of RiskMetrics. The transaction is subject to customary closing conditions, including approval by the shareholders of RiskMetrics, the receipt by MSCI of the proceeds of the debt financing for the transaction, antitrust clearance and other customary regulatory approvals. The transaction is currently expected to close in MSCI's third fiscal quarter of 2010.
The transaction is expected to be financed by existing cash and proceeds of debt. MSCI has received a commitment letter from Morgan Stanley Senior Funding, Inc. for senior secured credit facilities aggregating up to $1.375 billion, which would be available, subject to customary conditions, to fund the cash consideration in the acquisition, the refinancing of existing senior secured credit facilities of MSCI and RiskMetrics and the ongoing working capital needs of MSCI and its subsidiaries following the transaction.
"This deal marks a significant milestone in our effort to become the leading provider of investment decision support tools," said Henry Fernandez, Chairman and CEO, MSCI Inc. "The combined scale, complementary product capabilities and clients and extensive geographic footprint of MSCI and RiskMetrics will drive significant cost-saving synergies and revenue opportunities. RiskMetrics is the perfect match for MSCI and we are very excited to welcome them to the MSCI family."
"One of the key trends that has been driving the growth of our analytics business is the increased need to understand, measure, manage, and report risk. The combination of MSCI's expertise in portfolio equity risk models and analytics, and RiskMetrics' powerful multi-asset class risk management platform creates a comprehensive, best of breed portfolio risk management offering, which will provide our clients with a seamless view of risk across the front and middle office," added Mr. Fernandez.
"This is a truly powerful combination. This transaction with MSCI will benefit our investors, clients and employees," said Ethan Berman, Chief Executive Officer of RiskMetrics Group. "Managing risk is critically important in today's financial markets. Our clients will greatly benefit from the combined company's expanded product range and enhanced risk management offerings."