What is the primary purpose of this transaction?

The primary purpose is to create a joint venture that combines McGraw-Hill's S&P index business with CME Group's Dow Jones index business. This aims to create a more robust and competitive index offering by pooling complementary assets and expertise in the financial markets.

What is McGraw-Hill's ownership stake in the new joint venture?

McGraw-Hill will be the majority owner, holding a 73% stake in the joint venture. CME Group and its affiliate CGIS will collectively own the remaining 27%.

What impact will this have on the S&P 500® Index and its derivatives?

CME Group will continue to have a license to use the S&P 500® Index for futures and options on futures, with the license being exclusive for a significant period. The joint venture will provide this license, and CME Group will pay a fee based on its equity index complex profits.

Are there any restrictions on selling ownership in the joint venture?

Yes, there are significant restrictions. McGraw-Hill cannot dispose of its interests until December 31, 2017, except for certain spin-off transactions. After that date, sales are subject to rights of first offer and refusal by CGIS/CME Group. CME Group also has a right to put its interest to McGraw-Hill after 2017 under certain conditions.

SPGI 8-K SEC Disclosure

Summary

S&P Global Inc. (then The McGraw-Hill Companies, Inc.) announced a significant strategic transaction on November 4, 2011, involving the formation of a joint venture for its S&P index business. The company will contribute its S&P index business into a new entity, which will also incorporate CME Group Inc.'s Dow Jones index business. This move is designed to create a more comprehensive and competitive index offering. As part of the agreement, McGraw-Hill will acquire Credit Market Analysis Ltd. from CME Group, further consolidating its position in market data and analysis. Following the contributions, McGraw-Hill will hold a substantial 73% majority stake in the joint venture, with CME Group holding the remaining 27%. The joint venture will be managed by a board with representation proportional to ownership, though CME Group will have certain protective minority rights. This transaction signals a strategic shift to leverage the strengths of both companies in the index and financial data markets, aiming to enhance product offerings and market presence. Investors should monitor the integration of these businesses and the future performance of the joint venture.

Key Highlights

1Formation of a joint venture combining S&P's index business with CME Group's Dow Jones index business.
2McGraw-Hill will hold a 73% majority ownership in the new joint venture.
3McGraw-Hill will acquire Credit Market Analysis Ltd. from CME Group as part of the transaction.
4The joint venture will be governed by a board of directors with representation proportional to ownership, including minority protective rights for CME Group.
5The agreement includes a new license agreement for CME Group to use S&P stock indexes, with exclusive rights for certain indexes in futures and options on futures.
6Non-compete clauses are included for both McGraw-Hill and CME Group concerning the index business.
7Restrictions on the transfer of joint venture interests are outlined, including specific terms for McGraw-Hill's disposition of its stake and put/call options for CME Group after 2017.

S&P Global Inc. 8-K Report, Corporate Update (Nov 4, 2011)

Summary

Key Highlights

Frequently Asked Questions