London Stock Exchange confirms $2.7 billion Russell Investments deal

Russell Investments is about to be acquired by the London Stock Exchange for $2.7 billion.

The London Stock Exchange Group has finally agreed to acquire Russell Investments in a huge $2.7 billion (£1.59 billion) deal, subject to shareholder and regulatory approval.

On 26 June, the exchange said it was planning to carry out the major deal with assistance from a $1.6 billion rights issue as part of a plan to break into the huge US capital markets, taking over Russell from life insurer Northwestern Mutual.

It was confirmed last month that the London Stock Exchange was interested in pursuing the deal, but it had to fight out competition from New York-based rival MSCI.

Now, Europe’s oldest independent exchange is set to complete the biggest deal in its 200-year history, which will help to solidify its position in a marketplace where consolidation is becoming much more widespread.

Indeed, it will become the third-biggest exchange-traded fund (ETF) index provider in the world, behind only S&P Dow Jones and MSCI. It would also be the second-biggest organisation in US-listed ETFs and hold benchmarked assets worth a massive $9.2 billion.

“The directors believe the acquisition is a rare opportunity to acquire a high-quality US business with a leading global brand providing index and investment management services,” said London Stock Exchange Group in a statement.

Russell is already well-known in the US for benchmarks such as the Russell 2000 and has a reputation as a leading index compiler and asset manager.

So the London Stock Exchange Group’s takeover deal demonstrates how firms are seeking to take advantage of the richest data, analytics and index-based products to inform their trading decisions.

Specialist indices and data targeted at specific markets are now in higher demand than ever. Interestingly, the exchange may now have the opportunity to increase its offering even further if it chooses to merge the company with FTSE International, which it owns outright.

According to Reuters, after a merger with Canadian TMX group failed in 2011 there were concerns that the London Stock Exchange Group itself could be taken over. After cementing its place in the market with the Russell deal, that threat is likely to remain at bay.