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The S&P 500 and the Dow Jones industrial average will be united under the same ownership umbrella, bringing together two of the biggest names in indexing in an entity that will generate more than $400 million in annual revenue.
The new entity, S&P/Dow Jones Indices, will be 73 percent owned by McGraw-Hill, the parent of Standard & Poor’s, the companies said in a joint press release issued in early November. CME Group, which owns most of Dow Jones indexes, will hold a 24.4 percent stake in the venture, while Dow Jones & Co. Inc. will hold a 2.6 percent stake. The transaction has approval of both companies’ boards.
The two widely used benchmarks in the world of investing having the same owners potentially means they would have a clear edge over other indexing-industry competitors, notably MSCI, which was outbid by CME Group last year in its attempt to acquire Dow Jones Indexes from Dow Jones & Co. Inc. CME Group now owns 90 percent of Dow Jones Indexes, while Dow Jones & Co., the News Corp. unit, currently holds a 10 percent stake.
The press release said that the joint venture would be up and running within the first six months of 2012.
The new indexing company will become part of the new McGraw-Hill Markets, which will come out of the separation of McGraw-Hill into two public companies. McGraw-Hill announced plans for that separation on Sept. 12.
The companies said that under their agreement, the S&P/Dow Jones Indices joint venture will enter into a new license agreement under which the CME Group will pay S&P Indices a share of profits from the CME Group equity products lineup.
That new license agreement also expands products covered under the license to include swaps, and extends CME Group’s currently exclusive rights to E-mini futures and other indexed S&P indexed futures. That exclusive agreement is in place until the end of 2017, the companies said.
Alexander Matturri, executive managing director of S&P Indices, will be the chief executive officer of S&P/Dow Jones Indices.
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2012
