US Edition 
LSE to buy Frank Russell for £1.6bn
The bourse will tap shareholders for £942m to help fund the deal
London Stock Exchange Group will tap shareholders for £942m to help fund its acquisition of American stock index and asset management business Frank Russell, the bourse's biggest ever deal.
The LSE, which owns the FTSE indices, on Thursday announced that it was buying the US firm from Northwestern Mutual for £1.6bn, an acquisition that will boost the London bourse’s presence in America.
The purchase will create an index giant to rival MSCI Inc: Some $5.2 trillion in equities are benchmarked against Russell indices, and a further $4 trillion are benchmarked to the FTSE indices. As part of the deal, the LSE is also buying Russell’s investment management business, which has $256bn in assets under management.
Analysts at Numis Securities hailed the acquisition as “transformational” and said: “This deal is the largest in the LSE’s 213- year history and marks a substantial move into the US where Russell is best known for its equity benchmarks such as the Russell 2000.”
However, they were less certain about the purchase of the asset management business.
The LSE said it would undertake a “comprehensive review” of the division, which should be finished by the time the acquisition completes. Given there is little overlap with the LSE’s existing operations, the Numis analysts thought a sale was the likeliest outcome of the review.
“We can see no immediate links between this business and the rest of the LSE group and consequently the LSE is reviewing it. We suspect a sale is likely, possibly after the LSE has worked on its operating efficiency and profitability.”
The LSE has made a number of acquisitions in recent years in an effort to diversify. Last year, the bourse completed its purchase of a 55pc stake in LCH.Clearnet, which finalises trades in assets such as exchange-traded derivatives, commodities, energy, freight, foreign exchange derivatives and interest rate swaps. In 2011, the LSE acquired the 50pc of FTSE International that it did not already own from Pearson.
Investors cheered the group’s latest acquisition and sent LSE shares up 6.2pc, making it the biggest riser in the FTSE 100. Shareholders will vote on the rights issue in September.