According to an announcement, the two firms have entered into a definitive merger agreement whereby MSCI will acquire RiskMetrics in a cash and stock transaction valued at $21.75 per share ($16.35 in cash and 0.1802 shares of MSCI per share of RiskMetrics) based on MSCI’s closing price of $29.98 per share on Friday, February 26, 2010 (approximately $1.55 billion).
The combined company would have approximately $750 million of revenues and approximately 2,000 employees across 20 countries.
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. However, the Boards of Directors of both companies have already approved the transaction, and in connection with the transaction, Ethan Berman, the Chief Executive Officer of RiskMetrics Group, and certain other RiskMetrics shareholders, have entered into a voting agreement with MSCI pursuant to which they have agreed to vote, in the aggregate, approximately 54% of the outstanding RiskMetrics shares in favor of this transaction, according t oa press release.
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. According to a press release, 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.”