CME Group to Take 90 Percent Stake in Joint Venture Owning Dow Jones Indexes Business
February 10 2010 - 4:15PM
PR Newswire (US)
CHICAGO, Feb. 10 /PRNewswire-FirstCall/ -- CME Group, the world's
leading and most diverse derivatives marketplace, and Dow Jones
& Company today announced that they have signed a definitive
agreement in which CME Group will take a 90 percent ownership
interest and Dow Jones will take a 10 percent ownership interest in
a new joint venture that will own the Dow Jones Indexes, which
includes The Dow Jones Industrial Average and approximately 130,000
index properties. Pending approval by regulators and completion of
customary closing conditions, the transaction is expected to close
during the first quarter of 2010. "We are pleased to strengthen our
partnership with Dow Jones," said CME Group Executive Chairman
Terry Duffy. "Joining the resources and expertise of one of the
world's leading marketplaces for equity index derivatives trading
with a premier index provider is an exciting next step that will
allow us to expand our index and market data offerings as well as
to fuel growth opportunities in our equity index complex. We expect
this transaction will allow us to further diversify our revenue
streams, creating sustainable new value for our customers and
shareholders." "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," said Craig
Donohue, CME Group Chief Executive Officer. "We look forward to
continuing the strong relationships that Dow Jones has developed
with clients and other leading exchanges that offer exchange traded
funds, equity index options and structured products which
complement CME Group's equity index contracts." Dow Jones &
Company will contribute the Dow Jones Indexes business, valued at
$675 million, to the joint venture. CME Group will contribute
certain market data services, valued at $607.5 million, to the
joint venture. The venture also will raise approximately $613
million in third-party debt which will be used to pay a $607.5
million distribution to Dow Jones. Terms of the agreement provide
for the joint venture to license the Dow Jones name for the new
index services business on a long-term basis. Ownership of the Dow
Jones brand, including trademarked names, will remain with Dow
Jones. The managing editor of The Wall Street Journal will continue
to participate in decisions regarding constituent stock selection
for the Dow Jones Industrial Average and other index products.
Building on the strong brand and market expertise of both CME Group
and DJI, the partnership will also expand the global reach of its
index creation, calculation services and market data businesses
across complementary asset classes, including cash, derivatives and
customized OTC markets. Barclays Capital is acting as financial
advisor to CME Group, and Kirkland & Ellis LLP is acting as CME
Group's legal advisor. About CME Group CME Group is the leading
equity index derivatives marketplace, offering futures and options
on key benchmark indexes that cover the spectrum of small-, medium-
and large-cap indexes in the U.S., Europe and Asia, including the
DJIA as well as the S&P 500, NASDAQ-100, Nikkei 225 Stock
Average, MSCI EAFE, FTSE/Xinhua China 25. As the world's leading
and most diverse derivatives marketplace, CME Group
(http://www.cmegroup.com/) is where the world comes to manage risk.
CME Group exchanges offer the widest range of global benchmark
products across all major asset classes, including futures and
options based on interest rates, equity indexes, foreign exchange,
energy, agricultural commodities, metals, weather and real estate.
CME Group brings buyers and sellers together through its CME Globex
electronic trading platform and its trading facilities in New York
and Chicago. CME Group also operates CME Clearing, one of the
largest central counterparty clearing services in the world, which
provides clearing and settlement services for exchange-traded
contracts, as well as for over-the-counter derivatives transactions
through CME ClearPort. These products and services ensure that
businesses everywhere can substantially mitigate counterparty
credit risk in both listed and over-the-counter derivatives
markets. The Globe logo, CME, Chicago Mercantile Exchange, CME
Group, Globex, E-mini and CME ClearPort are trademarks of Chicago
Mercantile Exchange Inc. CBOT and Chicago Board of Trade are
trademarks of the Board of Trade of the City of Chicago. NYMEX and
New York Mercantile Exchange are trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All
other trademarks are the property of their respective owners.
Further information about CME Group (NASDAQ:CME) and its products
can be found at http://www.cmegroup.com/. Statements in this press
release that are not historical facts are forward-looking
statements. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual outcomes and results
may differ materially from what is expressed or implied in any
forward-looking statements. Among the factors that might affect our
performance are: increasing competition by foreign and domestic
entities, including increased competition from new entrants into
our markets and consolidation of existing entities; our ability to
keep pace with rapid technological developments, including our
ability to complete the development and implementation of the
enhanced functionality required by our customers; our ability to
continue introducing competitive new products and services on a
timely, cost-effective basis, including through our electronic
trading capabilities, and our ability to maintain the
competitiveness of our existing products and services; our ability
to adjust our fixed costs and expenses if our revenues decline; our
ability to generate revenues from our processing services; our
ability to maintain existing customers, develop strategic
relationships and attract new customers; our ability to expand and
offer our products in foreign jurisdictions; changes in domestic
and foreign regulations; changes in government policy, including
policies relating to common or directed clearing ; changes in
government policy, including policies related to common or directed
clearing and changes as a result of legislation stemming from the
recent financial crisis, including the proposed regulatory reform
of the over-the-counter derivatives and futures market and any
changes in the regulation of our industry with respect to
speculative trading in commodity interests and derivative
contracts; the costs associated with protecting our intellectual
property rights and our ability to operate our business without
violating the intellectual property rights of others; our ability
to generate revenue from our market data that may be reduced or
eliminated by the growth of electronic trading or declines in
subscriptions; changes in our rate per contract due to shifts in
the mix of the products traded, the trading venue and the mix of
customers (whether the customer receives member or non-member fees
or participates in one of our various incentive programs) and the
impact of our tiered pricing structure; the ability of our
financial safeguards package to adequately protect us from the
credit risks of clearing members; the ability of our compliance and
risk management methods to effectively monitor and manage our
risks; changes in price levels and volatility in the derivatives
markets and in underlying fixed income, equity, foreign exchange
and commodities markets; economic, political and market conditions,
including the recent volatility of the capital and credit markets
and the impact of current economic conditions on the trading
activity of our current and potential customers; our ability to
accommodate increases in trading volume and order transaction
traffic without failure or degradation of performance of our
systems; our ability to execute our growth strategy and maintain
our growth effectively; our ability to manage the risks and control
the costs associated with our acquisition, investment and alliance
strategy; our ability to continue to generate funds and/or manage
our indebtedness to allow us to continue to invest in our business;
industry and customer consolidation; decreases in trading and
clearing activity; the imposition of a transaction tax on futures
and options on futures transactions; the unfavorable resolution of
material legal proceedings and the seasonality of the futures
business. More detailed information about factors that may affect
our performance may be found in our filings with the Securities and
Exchange Commission, including our most recent periodic reports
filed on Form 10-K and Form 10-Q, which are available in the
Investor Relations section of the CME Group Web site. We undertake
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
CME-G DATASOURCE: CME Group CONTACT: Media, Michael Shore,
+1-312-930-2363, or Allan Schoenberg, +1-312-930-8189, ; or
Investors, John Peschier, +1-312-930-8491, all of CME Group Web
Site: http://www.cme.com/
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