MSCI Inc. said Monday that it has agreed to buy RiskMetrics Group Inc. for about $1.55 billion in cash and stock in a deal between companies that provide support services to financial companies.
MSCI sells tools to help portfolio managers make investment decisions, while RiskMetrics provides risk management and corporate governance services to financial companies.
The combined company will have revenue of approximately $750 million and about 2,000 employees across 20 countries. Both companies are based in New York.
MSCI offered $16.35 in cash and 0.1802 of its stock for each share of RiskMetrics. The transaction is valued by the companies at $21.75 per share based on MSCI's closing price Friday.
That is a premium of almost 17 percent over RiskMetrics' closing price on Friday.
In premarket trading on Monday, RiskMetrics shares rose $2.28, or 12.2 percent, to $20.91.
The boards of both companies have approved the deal, which is also subject to approval by RiskMetrics' shareholders, regulatory clearance and other conditions.
The acquisition is expected to close in MSCI's third quarter.
MSCI Chairman and CEO Henry Fernandez said the acquisition offers MCSI some complementary products, broadens its geographic reach and gives it an opportunity to increase revenue.
He said the company also hopes to save about $50 million by getting rid of redundant operations and offices.
MSCI plans to fund the deal with cash on hand and debt proceeds. It said it has a commitment letter from Morgan Stanley Senior Funding Inc. senior secured credit agreement of up to approximately $1.38 billion, which would be used for the cash portion of the acquisition, refinancing existing credit facilities of both companies and ongoing working capital needs.
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