The Shareholder ForumTM


"Say on Pay" Proposals

Forum Home Page

"Say on Pay" Home Page

Program Reference


For the press release announcing plans for the business combination reported below, see

Note: A recording of the referenced analyst conference call, during which which MSCI's CEO Henry Fernandez stated in response to questions that the ISS corporate governance services are considered a "non-core" unit that will be operated to generate cash flow for debt reduction, should be available until March 8, 2010 from links on the investor relations sections of either of the two companies’ websites, and, or by telephone at 1-888-203-1112 (passcode: 2487893) from within the United States or for international callers at 1-719-457-0820 (passcode: 2487893).


Wall Street Journal, March 1, 2010 article


Need a Real Sponsor here

MARCH 1, 2010, 11:14 A.M. ET

MSCI Agrees to Acquire RiskMetrics in $1.55 Billion Deal

MSCI Inc. announced plans to buy RiskMetrics Group Inc. for about $1.55 billion, marrying two of the largest providers of investment and risk-management tools.

The agreed cash-and-stock deal would combine MSCI, best known for its equity and bond indexes, with a specialist provider of analytic tools at a time when regulators are pushing enhanced risk management.

MSCI Chief Executive Henry Fernandez said the proposed deal would be earnings-accretive and provide a platform to roll out products across a range of asset classes to a combined 6,000 or so clients.

The deal "brings us a giant step forward to offering a seamless view of risk across our clients' investment process," he said on a conference call.

He added that MSCI had been under "no competitive pressure" to make a deal with RiskMetrics, and that his company remains on the lookout for other potential purchases in the index business.

MSCI shares were down 2.3% at $29.29 midmorning. RiskMetrics shares shot 13.96% higher to $21.23.

MSCI's own risk business was loss-making, Mr. Fernandez said, but had identified synergies from the proposed deal that would allow it to match the higher margins generated by its core index operation.

RiskMetrics also owns one of the largest proxy-advisory firms, ISS. Mr. Fernandez described it as "non-core", but said it would be retained to generate cash.

He said MSCI would be able to roll out RiskMetrics' products in Asia and develop new benchmarks and indexes, such as those aimed at the fast-growing "social investment" community.

MSCI is offering a mix of cash and stock that values RiskMetrics at $21.75 a share, a 17% premium to Friday's closing price. RiskMetrics shareholders would receive $16.35 in cash and 0.1802 MSCI share per RiskMetrics share.

The deal is expected to close in late spring or early summer, pending approval by RiskMetrics shareholders. The combined company will count $746 million in revenues and employ more than 2,000 people. Ethan Berman, RiskMetrics' CEO, will stay on in a temporary advisory role.

Mr. Fernandez said MSCI's long-term revenue growth targets remain in place, though the transaction could accelerate profit growth.

New York-based MSCI in recent weeks shifted its attention to acquiring the risk-analysis and investment-research firm after failing in an effort to possibly acquire Dow Jones & Co.'s index business.

MSCI, a former unit of Morgan Stanley, specializes in building market indexes and calculates tens of thousands of stock real-estate investment-trust indexes daily. It also produces computerized tools for investors such as pension funds and hedge funds.

The company received a commitment letter from Morgan Stanley for secured credit facilities of up to $1.38 billion to fund the cash portion of the deal, and for other purposes.

RiskMetrics put itself on the block in January and at the time was expected to fetch a premium of about 30% of its value at the time, which then would have valued the company at about $1.3 billion, according to The Wall Street Journal.

Other interested parties included private-equity firms and media companies, including Bloomberg, McGraw Hill Cos. and Thomson Reuters. Many of the same companies also were believed to be weighing bids for Interactive Data Corp., a financial-market-data analysis firm partially owned by Pearson PLC, owner of the Financial Times.

— Doug Cameron and Jacob Bunge contributed to this article.

Write to Tess Stynes at


Copyright ©2010 Dow Jones & Company, Inc. All Rights Reserved




This Forum program is open, free of charge, to anyone concerned with investor interests relating to shareholder advisory voting on executive compensation, referred to by activists as "Say on Pay." As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The organization of this Forum program was supported by Sibson Consulting to address issues relevant to broad public interests in marketplace practices, rather than investor decisions relating to only a single company. The Forum may therefore invite program support of several companies that can provide both expertise and examples of performance leadership relating to the issues being addressed.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.