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UPDATE 2-Dow Jones sells stake in Stoxx to Deutsche Boerse, SIX
November 12, 2009 / 7:34 AM / 8 years ago

UPDATE 2-Dow Jones sells stake in Stoxx to Deutsche Boerse, SIX

* German/Swiss partners pay $301.9 mln for DJ’s 1/3 stake

* DJ could get another 29 mln euros if performance good

* Equity-financed deal set to close in Q1 2010

* Future of DJ Indexes business in flux - WSJ

(Recasts, adds further details, background)

By Ajay Kamalakaran and Michael Shields

BANGALORE/FRANKFURT, Nov 12 (Reuters) - News Corp’s (NWSA.O) Dow Jones & Co Inc is selling its stake in index provider Stoxx Ltd to Germany’s Deutsche Boerse AG (DB1Gn.DE) and Swiss partner SIX Group for $309.1 million in cash, the companies said on Thursday.

The deal, a sign that Dow Jones may be looking to exit the index business, includes a payment of 132.1 million euros ($197.8 million) for Dow Jones’s one-third stake in Stoxx and 74 million euros for intellectual property rights acquired by Stoxx, the German stock exchange operator said on Thursday.

“This is the result of a strategic evaluation of Dow Jones’ index businesses,” Dow Jones Chief Executive Les Hinton said in a statement.

In August, a source familiar with the matter told Reuters that Dow Jones was in the early stages of exploring a sale of its stock market index business, which includes the Dow Jones industrial average .DJI. [ID:nN2373705]

“There will be the opportunity for Dow Jones & Co to earn up to a further 29 million euros depending on business performance, with any payment to occur by mid-2011,” Deutsche Boerse said.

Deutsche Boerse, SIX and Dow Jones had each held a one-third stake in Swiss-based Stoxx. After the sale, Deutsche Boerse will own 50 percent plus one share and consolidate Stoxx results.

The equity-financed deal is expected to close in the first quarter of next year, Boerse said.

SIX Group and Deutsche Boerse intend to set up a new entity to perform index calculations, with SIX Group owning 50 percent plus one share, it added.

DJ EXITING INDEX BUSINESS?

The Wall Street Journal, citing people familiar with the matter, said on Thursday the index business contributes about $90 million in annual revenue to Dow Jones.

The future of the core Dow Jones Indexes business remains in flux, the paper said, citing the sources.

Rupert Murdoch’s News Corp bought Dow Jones in 2007 for $5.7 billion, but since then he has come under criticism for paying such a hefty price for a publishing company whose businesses have suffered from the sharp drop in ad sales.

Earlier this year, News Corp wrote down $2.8 billion in Dow Jones’ value.

Industry analysts never felt the company’s index business was much favoured by Murdoch, a passionate backer of newspapers and one of the best-known media moguls.

Indeed, a number of analysts expected him to consider a sale of the index business soon after striking the deal for Dow Jones.

Anchored by the Dow Jones industrial average, the best-known measurement of U.S. stocks, the company’s indexes business creates and licenses trading indexes.

Potential buyers for the business could include McGraw-Hill Cos MHP.N Standard & Poor‘s, Russell Indexes, MSCI Inc MXB.N, Bloomberg, Pearson Plc’s (PSON.L) Financial Times and Thomson Reuters Corp TRIN.O (TRI.TO) TRIL.L. (TRI.N). ($1=.6680 EURO) (Reporting by Ajay Kamalakaran in Bangalore and Michael Shields in Frankfurt; Editing by Andy Bruce)

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