ISS a good thing to sell

1 March 2010 By Robert Cyran Follow @rob_cyran

The analytics business spun out by Morgan Stanley is paying $1.6 bln for the risk management and corporate advisory firm. The price looks a bit value destructive. A bigger question may be what to do with RiskMetrics proxy service ISS, and potential conflicts of interest.

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MSCI has agreed to buy RiskMetrics Group for $1.6 billion, or $21.75 per share. The index and analytics firm will pay $16.35 in cash and 0.1802 MSCI shares for every share in the risk management and corporate advisory firm.

That is a 40 percent premium to where RiskMetrics' shares traded prior to news that the firm was putting itself up for sale in January. RiskMetrics' initial public offering took place in Jan. 2008 at $17.50 a share.

Ethan Berman, RiskMetrics' chief executive officer, and certain other RiskMetrics shareholders, who hold about 54 percent of the company, have agreed to vote in favor of the transaction.

RiskMetrics' governance and proxy service, ISS, accounted for 48 percent of revenue in 2009.

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