Shares of MSCI jump after company says it will purchase RiskMetrics Group for $1.55 billion

Tuesday, March 2, 2010

MSCI shares rise on RiskMetrics deal

NEW YORK — Shares of MSCI Inc. jumped Tuesday, a day after the company said it had agreed to buy RiskMetrics Group Inc. for about $1.55 billion in cash and stock.

Shares of MSCI rose $3.52, or 12.3 percent, to $32.11 in afternoon trading. RiskMetrics shares jumped 67 cents, or 3.18 percent, to $21.76.

MSCI sells tools to help portfolio managers make investment decisions, while RiskMetrics provides risk management and corporate governance services to financial companies.

The combined company will have revenue of approximately $750 million and about 2,000 employees across 20 countries.

On Tuesday, Keefe, Bruyette & Woods analyst Aaron D. Teitelbaum said the deal could create cost and revenue synergies for MSCI in the future. He upgraded the company to “Outperform” from “Market Perform,” saying an initial sell-off in shares Monday opened opportunities for investors.

Teitelbaum also raised his full-year earnings estimates for 2010 and 2011. He bumped up his 2010 estimate to $1.38 per share from $1.31, and raised his 2011 estimate to $1.81 from $1.57.

He also increased his price target to $36 from $33.

The boards of both MSCI and RiskMetrics have approved the deal, which is also subject to approval by RiskMetrics’ shareholders, regulatory clearance and other conditions.

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