CITIC In The Lead to Buy Russell Investments: Sources

CITIC In The Lead to Buy Russell Investments: Sources

China's CITIC Group Corporation is in negotiations to acquire Russell Investments from London Stock Exchange Group Plc (LSE.L) in what is expected to be a roughly $1.8 billion deal, according to people familiar with the matter.

The acquisition of Russell, if finalized, would give CITIC, a Beijing-based conglomerate that has a financial services arm and also owns CITIC Asset Management Corp, an entry into the United States market.

The negotiations are ongoing and the deal could still fall through, according to the sources, all of whom wished to remain anonymous because they are not permitted to speak to the media.

It is unclear how the current stock market volatility in China may affect the deal, two of the people said. All of the sources wished to remain anonymous because they are not permitted to speak to the media.

LSE declined to comment while CITIC did not respond to a request for comment. Financial News reported earlier this month that CITIC had emerged as frontrunner in a shortlist of bidders for Russell.

The Shanghai Composite Index has tumbled 28 percent since mid-June, ending a rally that had previously seen the market double from its June 2014 low.

Towers Watson & Co (TW.O) and China's Shanda Group, an investment holding group that started out as an online game company, also bid for Russell

Last week insurance broker Willis Group signed an $18 billion agreement with Towers Watson & Co (TW.O) to combine the companies in an all-stock deal with an implied equity value of about $18 billion. That deal could make it difficult for Towers to proceed with an acquisition of Russell, one of the sources said.

Towers Watson declined to comment.

If the deal is completed, it would end a long period of uncertainty for Seattle-based Russell Investments, which had $272 billion in assets under management at year-end.

LSE bought Russell from insurer Northwestern Mutual last year for $2.7 billion, primarily for its large index business. The exchange operator prevailed over a number of interested buyers, including Canadian Imperial Bank of Commerce (CM.TO) and a handful of private equity firms, sources said at the time.

LSE tapped JPMorgan Chase (JPM.N) to sell Russell Investments earlier this year after having informal conversations with at least three interested buyers including CIBC.

 

(Reporting By Jessica Toonkel in New York and Saikat Chatterjee in Hong Kong; Additional reporting by Mike Stone in New York, and Denny Thomas in Hong Kong; Editing by Cynthia Osterman)

TAGS: Industry
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