London Stock Exchange Group to Acquire Russell

The London Stock Exchange Group (LSEG) announced its proposed acquisition of the Frank Russell Company from Northwestern Mutual and other, minority shareholders.

The exchange already owns FTSE Group, the operator of indexes including the FTSE 100, which tracks the top 100 stocks traded in London. The deal will bring together $5.2 trillion of assets benchmarked to Russell and an estimated $4 trillion of equities benchmarked to FTSE. Russell Investment Management has $256 billion of global assets under management (AUM) and $2.4 trillion of assets under advisement through its Consulting division.

For the London Stock Exchange Group, the deal will accelerate its diversification strategy and enhance its information services offering, particularly in the United States. The deal also allows LSEG to further capitalize on key industry trends such as growth in multi-asset solutions and passive investment strategies. According to LSEG, retention plans will be put in place for key Russell employees to drive performance.

“The acquisition of Russell sits squarely with our diversification strategy, builds on one of our core strengths in intellectual property and provides another key driver of growth by growing our presence in the United States,” says Xavier Rolet, chief executive of the London Stock Exchange Group. “Russell is a very high quality business with a track record of innovation and a world-class client and employee base. We are committed to preserving the qualities that have attracted these clients and employees to the firm.”

Len Brennan, president and CEO of Russell, says, “This joining of two organizations offers many strategic benefits. The combination of our index business with FTSE creates a truly global index leader, with a highly complementary fit of products and distribution capabilities and a unique position as a leader in major domestic market benchmarks, as well as international equities.” Brennan will join the executive committee of the London Stock Exchange Group upon completion of the acquisition.

LSEG has not yet responded to a request for comments.

The $2.7 billion acquisition is expected to be completed by late in the fourth quarter of 2014 or early in the first quarter of 2015, subject to shareholder approval, regulatory approvals, anti-trust clearances and client consents.