NEW YORK and CHICAGO, Nov. 4,
2011 /PRNewswire/ -- McGraw-Hill (NYSE: MHP), one of the
world's foremost financial information companies and owner of
S&P Indices, and CME Group (NASDAQ: CME), the world's leading
and most diverse derivatives marketplace and 90-percent owner of
the CME Group/Dow Jones joint venture, announced today an agreement
to establish a new joint venture in the rapidly growing index
business. Under the terms of the agreement, which has been
approved by the Boards of both companies, McGraw-Hill will
contribute its S&P Indices business and the CME Group/Dow Jones
joint venture will contribute the Dow Jones Indexes business to
create S&P/Dow Jones Indices, a global leader in index services
with annual revenue of more than $400
million. Approximately $6
trillion in assets are benchmarked against these leading
indices.
McGraw-Hill will own 73 percent of S&P/Dow Jones Indices,
CME Group will own 24.4 percent through its affiliates, and Dow
Jones will own 2.6 percent. S&P/Dow Jones Indices is
expected to be operational in the first half of 2012, subject to
regulatory approval and customary closing conditions. The new
company will become part of the new McGraw-Hill Markets company
following the separation of McGraw-Hill into two public companies,
as announced on September 12,
2011.
As part of the new joint venture, S&P/Dow Jones Indices will
enter into a new license agreement whereby CME Group will pay
S&P Indices a share of the profits of CME Group's equity
product complex, which is their trading and clearing business for
futures, swaps and options on futures. In addition, the new
license agreement expands the products covered under the license to
include swaps and extends CME Group's existing exclusive rights
(currently in place through December 31,
2017) to the E-mini and other S&P indexed futures.
Harold McGraw III, chairman,
president and chief executive officer of McGraw-Hill, said, "This
joint venture expands our dynamic index business and accelerates
the growth of the new McGraw-Hill Markets company. By
combining our unique and complementary strengths, we are creating a
leading global index provider with the breadth and depth to provide
both retail and institutional investors with the cutting-edge
products and services they need to make sound investment decisions
in today's complex markets. In addition, McGraw-Hill Markets
will benefit from the new license agreement that changes S&P's
Indices' relationship with CME Group from a transactional
fee-per-trade model to a partnership in which S&P Indices
participates in the profits of CME Group's overall equity product
complex."
Terry Duffy, CME Group executive
chairman, said, "This new joint venture reflects CME Group's
continued commitment to creating trading opportunities for our
global customer base. Through the new JV company, we look
forward to developing leading risk-management solutions in equity
indexes and across other asset classes, as well as diversifying our
revenue streams, thereby creating value for our shareholders and
customers in both institutional and retail client segments."
Craig Donohue, CME Group chief
executive officer, said, "As part of our global growth strategy,
CME Group has continued to expand our index services business, both
through our own index futures and options products as well as
through new product development at our Dow Jones Indexes
subsidiary. The expanded partnership announced today not only
creates a leading index services provider that will benefit our
customers and shareholders, but also will deliver new opportunities
for innovation, including a long-term, ownership-based exclusive
global license for CME Group to use the S&P 500® for futures
and options on futures products going forward."
The transaction is expected to be immediately accretive to
McGraw-Hill's earnings and S&P/Dow Jones Indices is expected to
drive profit growth by:
- Increasing revenue through international and asset-class
expansion, new product development, enhanced market data offerings
and increased cross-selling opportunities
- Achieving cost savings and accelerating time to market by
leveraging technology, data procurement, other back office
functions and McGraw-Hill Markets' infrastructure
- Reducing capital requirements and generating free cash flow for
parent companies.
Alexander Matturri, executive
managing director of S&P Indices, will be chief executive
officer of S&P/Dow Jones Indices and Lou Eccleston, president of McGraw-Hill
Financial, will chair the company's seven-member Board that will
include five directors designated by McGraw-Hill and two by CME
Group.
Matturri said, "Those who rely on indices worldwide – from
product issuers to exchanges to investors – will benefit from a
deeper lineup of indices as well as a business model focused on
innovation, performance and impact. Combining S&P
Indices' institutional strength with CME Group's global exchange
partnerships and Dow Jones Indexes' retail focus will optimize our
ability to respond to the changing global environment with
increased speed and efficiency. Just as important, the
structure of the joint venture is flexible enough to allow us to
maintain our existing exchange relationships and work with other
potential partners that could bring additional capabilities to the
new company."
All current indices will retain their brand names (S&P or
Dow Jones). The S&P 500 and the Dow Jones Industrial
Average® will continue to be separately maintained and licensed as
the basis for a wide variety of funds and financial instruments.
This transaction does not affect existing licensing
agreements with other exchanges, nor does it preclude entering into
future agreements with additional providers.
Other provisions of the agreement include:
- McGraw-Hill will acquire London-based Credit Market Analysis Ltd.
(CMA), a leading source of independent data in the over-the-counter
markets, from CME Group. This acquisition significantly
expands McGraw-Hill's asset-class coverage for data and pricing and
adds the technology to move into intraday quotes on derivative and
other OTC securities.
- A separate license agreement between Platts, a unit of
McGraw-Hill, and CME Group/NYMEX will be extended.
McGraw-Hill was advised by BofA Merrill Lynch, Goldman Sachs and
Deutsche Bank. Barclays Capital acted as exclusive financial
advisor to CME Group.
Conference Call/Webcast Scheduled for 8:00 am Eastern Time on November 4, 2011: Harold McGraw III,
chairman, president and CEO of The McGraw-Hill Companies, and
Craig Donohue, CEO of the CME Group
will host a joint conference call this morning, November 4, at 8:00 AM
Eastern Time. This call is open to all interested
parties. Discussions may include forward-looking information.
Additional information presented on the conference call may
be made available on the corporations' respective Investor
Relations Web sites at www.mcgraw-hill.com/investor_relations and
www.cmegroup.com.
Webcast Instructions: Live and Replay
The webcast will be available live and in replay through the
corporations' respective Investor Relations Web sites via the
following link:
http://investor.mcgraw-hill.com/phoenix.zhtml?p=irol-eventDetails&c=96562&eventID=4225043.
(Please copy and paste URL into Web browser.) The archived
replay will be available beginning two hours after the conclusion
of the live call and will remain available for one year.
Telephone Access: Live and Replay
Telephone participants are requested to dial in by 7:50 AM. The passcode is "McGraw-Hill" and
the conference leader is Harold McGraw
III.
- For callers in the U.S.: (888) 391-6568
- For callers outside the U.S.: +1 (415) 228-4733 (long distance
charges will apply)
The recorded telephone replay will be available beginning two
hours after the conclusion of the call and will remain available
until December 5, 2011.
- For callers in the U.S.: (800) 348-3514
- For callers outside the U.S.: +1 (402) 220-9676 (long distance
charges will apply)
Presenters' Slides & Remarks
The presenters' slides will be made available for downloading at
the conclusion of the conference call/webcast on the corporations'
respective Investor Relations Web sites at
www.mcgraw-hill.com/investor_relations and www.cmegroup.com.
The final prepared remarks will be available for downloading
by the end of the business day.
Forward-looking Statements
The forward-looking statements in this news release involve
risks and uncertainties and are subject to change based on various
important factors, including worldwide economic, financial,
liquidity, political and regulatory conditions; the health of debt
and equity markets, including possible future interest rate
changes; the successful marketing of competitive products; the
effect of competitive products and pricing; the risk that the
transactions described herein are not consummated on their terms;
and other matters described in McGraw-Hill's filings with the SEC.
About The McGraw-Hill Companies: McGraw-Hill, which
announced on September 12, 2011, its
intention to separate into two public companies – McGraw-Hill
Markets (working name), primarily focused on global capital and
commodities markets and McGraw-Hill Education focused on digital
learning and education services worldwide – is a leading global
financial information and education company that helps
professionals and students succeed in the Knowledge Economy.
Leading brands include Standard & Poor's, S&P Capital
IQ, S&P Indices, Platts energy information services, J.D. Power
and Associates and McGraw-Hill Education. With sales of
$6.2 billion in 2010, the Corporation
has approximately 21,000 employees across more than 280 offices in
40 countries. Additional information is available at
http://www.mcgraw-hill.com/.
About S&P Indices: S&P Indices, a leading
brand of The McGraw-Hill Companies, maintains a wide variety of
investable and benchmark indices to meet an array of investor
needs. Over $1.25 trillion is
directly indexed to Standard & Poor's family of indices, which
includes the S&P 500, the world's most followed stock market
index, the S&P/Case-Shiller Home Price Indices, the leading
measure of U.S. home prices, the S&P Global BMI, an index with
approximately 11,000 constituents, the S&P GSCI, the industry's
most closely watched commodities index, and the S&P National
AMT-Free Municipal Bond Index, the premier investable index for
U.S. municipal bonds. For more information, please visit:
www.standardandpoors.com/indices.
About CME Group: As the world's leading and most
diverse derivatives marketplace, CME Group (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 world's leading central counterparty clearing
providers, which offers 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.
About Dow Jones Indexes: Dow Jones Indexes
is a leading full-service index provider that develops, maintains
and licenses indexes for use as benchmarks and as the basis of
investment products. Best-known for the Dow Jones Industrial
Average, Dow Jones Indexes offers more than 130,000 equity indexes
as well as fixed-income and alternative indexes, including measures
of hedge funds, commodities and real estate. Dow Jones Indexes
employs clear, unbiased and systematic methodologies that are fully
integrated within index families. Dow Jones Indexes is part of a
joint venture company owned 90 percent by CME Group and 10 percent
by Dow Jones & Company, Inc., a News Corporation company
(NASDAQ: NWS, NWSA; ASX: NWS, NWSLV).
Investors Relations Contacts:
McGraw-Hill
Donald S. Rubin
Senior Vice President, Investor Relations
(212) 512-4321 (office)
donald_rubin@mcgraw-hill.com
CME Group
John Peschier
Managing Director, Investor Relations
(312) 930-8491
john.peschier@cmegroup.com
News Media Contacts:
McGraw-Hill
Patti Rockenwagner
Senior Vice President, Corporate Communications
(212) 512-3533
patti_rockenwagner@mcgraw-hill.com
S&P Indices
David Guarino
Director, Communications
(212) 438-1471
dave_guarino@standardandpoors.com
CME Group
Laurie Bischel
Director, Corporate Marketing & Communications
(312) 907-0003
laurie.bischel@cmegroup.com
SOURCE The McGraw-Hill Companies; CME Group