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CME to take 90 per cent stake in joint venture owning Dow Jones Indexes

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CME Group and Dow Jones have signed a definitive agreement in which CME Group will take a 90 per cent ownership interest and Dow Jones will take a ten per cent ownership interest in a new joint venture that will own the Dow Jones Indexes.

Dow Jones Indexes 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,” says 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.” 

Dow Jones will contribute the Dow Jones Indexes business, valued at USD675m, to the joint venture. CME Group will contribute certain market data services, valued at USD607.5m, to the joint venture.

The venture also will raise approximately USD613m in third party debt which will be used to pay a USD607.5m 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 partnership will also expand the 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 adviser to CME Group, and Kirkland & Ellis is acting as CME Group’s legal adviser.

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