MSCI Inc. is buying RiskMetrics Group, Inc. in a cash and stock transaction valued at approximately US$1.55 billion, the companies said Monday.

The deal will combine RiskMetrics’ risk advisory content with MSCI’s Barra business, which provides risk management and portfolio analysis tools to fund managers for managing equity, fixed income and multi-asset class portfolios.

The transaction, which is subject to shareholder and regulatory approvals, is expected to close in the third quarter.

MSCI is offering US$16.35 in cash and 0.1802 of its’ shares per share of RiskMetrics. The deal is expected to be financed by existing cash and proceeds of debt.

“The transaction will unite two market leaders and powerful brands including MSCI, Barra, and RiskMetrics, to create a global, research-based, client-centric organization, dedicated to delivering world class investment decision support tools to financial institutions worldwide,” the firms said.

The combined company would have approximately US$750 million of revenues and approximately 2,000 employees across 20 countries.

“This deal marks a significant milestone in our effort to become the leading provider of investment decision support tools,” said Henry Fernandez, chairman and CEO, MSCI. “The combined scale, complementary product capabilities and clients and extensive geographic footprint of MSCI and RiskMetrics will drive significant cost-saving synergies and revenue opportunities.”

IE