GLOBAL - MSCI has agreed a deal to buy risk management and corporate governance service provider RiskMetrics, for $1.55bn (€1.14bn) in a cash and stocks transaction.

The move will connect MSCI Barra with RiskMetrics in its delivery of risk management and investment decision support tools, to create what MSCI describes as "a global, research-based, client-centric organisation".

One of the key elements of the services acquired by MSCI through this deal is the institutional investor class action support service previously known as Institutional Shareholder Services (ISS), which supports pension funds and other institutional investors seeking compensation from shareholder class actions.

ISS was bought by RiskMetrics in November 2006, and it was only recently that RiskMetrics also announced it was buying the specialist responsible investment research service KLD Research & Analytics. (See earlier IPE stories: ISS sold to RiskMetrics and RiskMetrics acquires KLD)

The takeover is still subject to approval by shareholders, and work will be needed to finance the deal, but is expected to be completed by the end of Q1 2010.

MSCI has received a commitment letter from Morgan Stanley Senior Funding for a $1.375bn credit facility to fund the cash transaction, as well as refinance debt at both divisions and provide ongoing capital.

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