London Stock Exchange To Buy US-based Russell For $2.7 Bln, Plans Rights Issue

(RTTNews) - London Stock Exchange Group Plc (LSE.L) or LSEG, Thursday said it has proposed to acquire the entire issued share capital of US asset manager Frank Russell Co., from Northwestern Mutual and other minority shareholders of Russell for $2.7 billion or 1.59 billion pounds in cash. The shares of LSEG rose about 6 percent in the morning trade.

The exchange operator noted that it plans a Rights Issue to raise net proceeds of around $1.6 billion or 942 million pounds to part fund the cash consideration for Russell. The Rights Issue is likely to be launched in September 2014, after approval of the acquisition by shareholders at the General Meeting.

The remaining $1.10 billion will be financed from existing and new bank debt facilities of LSEG.

The acquisition is expected to be earnings accretive in the first full year after acquisition on an aggregate basis, with Russell's index business accretive from year two on a standalone basis.

The deal is expected to accelerate LSEG's diversification strategy and enhance its Information Services offering, particularly in the U.S. According to LSEG, the combination of Russell's index business with FTSE creates a global leader in index services and the No. 2 player in US-listed ETFs. LSEG stated that the combined business, with total revenues of $466 million or 274 million pounds, brings together $5.2 trillion of assets benchmarked to Russell and an estimated $4 trillion benchmarked to FTSE.

In addition, the combination largely extends the geographic presence of each business with leadership positions in North America, Europe and Asia, it said.

Len Brennan, Russell's president and chief executive, will join the executive committee of LSEG at completion.

The board believes that the purchase represents a rare opportunity to acquire a high quality U.S. business with a leading global brand, offering index and investment management services.

Xavier Rolet, chief executive of LSEG said, "Russell's index management business is a strong strategic fit with FTSE. With this acquisition we are strongly positioned for the changing dynamics in the global indices market with a best in class offering, which we believe will help deliver outstanding returns for our shareholders."

LSE.L is currently trading at 1,981 pence, up 111 pence or 5.94 percent.