Bloomberg News

McGraw-Hill, CME in Talks to Combine Stock-Index Businesses

September 30, 2011

Sept. 30 (Bloomberg) -- McGraw-Hill Cos. and CME Group Inc. are in talks to combine their stockmarket index businesses, uniting the Standard & Poor’s 500 Index and the Dow Jones Industrial Average, said a person with knowledge of the matter.

In the deal under discussion, New York-based McGraw-Hill would end up with about a 75 percent stake in the combined venture, said the person, who spoke on condition of anonymity because the talks are private. Chicago-based CME would hold most of the rest, and News Corp., a minority owner of the Dow Jones index business, would get a small stake, this person said.

McGraw-Hill and CME may be weeks away from reaching an agreement, the person said. The companies have been discussing a combination for about a year and recently brought News Corp. into the talks, the person said.

Laurie Bischel, a spokeswoman at CME Group, said in an e- mail that the company doesn’t comment on rumor or speculation. Patti Rockenwagner, a spokeswoman for McGraw-Hill, declined to comment.

The Wall Street Journal reported the story yesterday.

S&P’s index business is worth about $1.7 billion, Sloan Bohlen, an analyst at Goldman Sachs Group Inc. in New York, said in a Sept. 1 report. The company has grown to more than 100,000 indexes in markets globally from its index of the 500 largest U.S. companies started in 1957.

Two Companies

McGraw-Hill said Sept. 12 it would split into two companies, separating its textbook publishing business from its other media and finance businesses, which will be renamed McGraw-Hill Markets, following a strategic review that began last year. Shareholders Jana Partners LLC and Ontario Teachers’ Pension Plan proposed in August that the company break into four businesses, with the S&P index business as a standalone company.

CME Group became a publicly traded company in 2002 and merged with the Chicago Board of Trade in 2007.

Bloomberg LP, the parent of Bloomberg News, competes with McGraw-Hill and CME in providing financial indexes.

--With assistance from Nina Mehta in New York. Editors: Stephen West, Elizabeth Wollman

To contact the reporter on this story: Zachary R. Mider in New York at zmider1@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net


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