FTSE Group (FTSE), part of London Stock Exchange Group (LSEG), and TMX Group(TSX: T.X, Stock Forum)? have signed a definitive agreement to combine their fixed income index businesses in a new joint venture.
FTSE TMX Debt Capital Markets will be the third largest fixed income exchange traded fund (ETF) index provider globally.
Together these indices are used as benchmarks for more than $1 trillion in fixed income assets.
According to the TMX Group press release, FTSE will own a 75% majority stake in the joint venture, with TMX Group holding a 25% stake.
For TMX Datalinx, the joint venture will enable more rapid global expansion as it exports its industry leading fixed income index and analytic capabilities by leveraging the global distribution reach of FTSE, one of the world's most recognized index brands.
In addition to holding a 25% interest in the joint venture, TMX Group will receive $112.2 million, subject to adjustments, which will be funded from existing LSEG cash resources.
The transaction will be slightly dilutive to earnings per share for TMX Group in 2013.
Closing is subject to customary conditions and is expected in the second quarter of 2013.
TMX’skey subsidiaries operate cash and derivative markets and clearinghouses for multiple asset classes including equities, fixed income and energy.
On Wednesday morning, TMX was trading at $53.74. The company has a market cap of $2.9 billion, based on 53.8 million shares outstanding. The 52-week high and low was $57.82 and $42.25 respectively.