Second Opinion Vanishes with Proxy Services Merger

July 26, 2001 ( - In the world of proxy advice there is now only one opinion. Yesterday, The Proxy Monitor Inc. (TPM) in conjunction with Warburg Pincus, a private equity/venture capital firm and Hermes Pensions Management, a U.K.-based investment firm owned by BT Pension Scheme, announced that it has acquired Institutional Shareholder Services, (ISS) a division of Thomson Corp.

Proxy declined to discuss the terms of the deal, however a Wall Street Journal article out today said parties close to the situation estimate the cost to be $45 million. The WSJ article also stated that the sale was part of an ongoing effort by Thomson, ISS’s parent company, to shed non-core business.

In a formal statement, The Proxy Monitor said the integration of its platforms with ISS’s would occur over the next six months. Additionally, ISS’s senior management will remain with the company while most business operations will be consolidated in the Washington, D.C. area.

Institutional investors such as CalPERS, use proxy advice firms to analyze and issue recommendations on corporate board disputes and hostile takeovers. Both TPM and ISS have played significant roles in a slew of high-profile cases, including the fight for control of Wachovia Corp as well as proxy disputes at Lone Star Steakhouse & Saloon Inc., Willamette Industries Inc. and Hercules Inc.

“The growth of proxy voting around the globe drove this combination,” said Bruce Babcock, CEO of ISS in a statement. “We’ve seen an explosion in the worldwide demand for quality and timely proxy voting research and related voting services. This demand is growing at light speed in Europe and Asia where record numbers of shareholders are exercising their rights. Combining the assets and talents of our two organizations allows us to better meet this growing global demand.”

Founded by corporate governance advocate Robert A.G. Monks in 1985, Rockville, Maryland-based ISS has more than 700 institutional and corporate clients in North America, Europe, and Asia.

New York-based Proxy Monitor, which began in 1989, has about 150 clients.

– Nicole Halsey