CME Group has struck a deal to take control of the Dow Jones stock index business through a joint venture with current owner News Corp that values the business at $675 million.
The widely predicted deal sees CME Group take 90% and Dow Jones 10% in the new business. The Chicago outfit will contribute market data services worth $607.5 million to the JV, which will raise around $613 million in third-party debt to pay News Corp $607.5 million.
Dow Jones was acquired by Rupert Murdoch's News Corp for around $5.7 billion in 2007. Murdoch's main target was the Wall Street Journal and the firm has been negotiating the sale of its index business, which manages the flagship Dow Jones Industrial Average, for months.
The company has already offloaded its 33.3% stake in Swiss index provider Stoxx to Deutsche Börse and Six Group for EUR206.1 million in cash.
The JV includes a long term licensing agreement for the Dow Jones name. The WSJ managing editor will also continue to play a part in deciding the Dow Jones Industrial Average's composition.
Craig Donohue, CEO, CME Group, says: "Our majority interest in this venture represents an important new milestone in CME Group's transformation into a global financial services company, further diversifying our global product development capabilities and allowing us to reach new customers in both the institutional and retail market segments."
Les Hinton, CEO, Dow Jones, adds: "This affords Dow Jones the opportunity to tighten its focus on its news and business information products while preserving and protecting an iconic business brand."
The deal is expected to close in the first quarter, subject to regulatory approval and the completion of closing conditions.