SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________________
FORM
8-K
CURRENT
REPORT
Pursuant
To Section 13 or 15(d) of
The
Securities Exchange Act of 1934
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Date
of report (Date of earliest event reported): March 1,
2010
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MSCI
Inc.
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(Exact
Name of Registrant
as
Specified in Charter)
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Delaware
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(State
or Other Jurisdiction of Incorporation)
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001-33812
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13-4038723
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(Commission
File Number)
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(IRS
Employer Identification No.)
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88
Pine Street, New York, NY
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10005
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (212)
804-3900
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Not
Applicable
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(Former
Name or Former Address, if Changed Since Last Report)
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______________________
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement
On February 28, 2010, MSCI Inc., a
Delaware corporation (“MSCI”), Crossway Inc., a
wholly owned subsidiary of MSCI and a Delaware corporation (“Merger Subsidiary”), and
RiskMetrics Group, Inc., a Delaware corporation (“RiskMetrics”), entered into an
Agreement and Plan of Merger (the “Merger Agreement”). The Merger
Agreement provides that, upon the terms and subject to the conditions set forth
in the Merger Agreement, Merger Subsidiary will merge with and into RiskMetrics
(the “Merger”), with
RiskMetrics continuing as the surviving corporation and a wholly owned
subsidiary of MSCI.
In connection, and concurrently, with
the Merger Agreement, (i) MSCI entered into a commitment letter (the “Commitment Letter”) with
Morgan Stanley Senior Funding, Inc. (“MSSF”) pursuant to which MSSF
committed to provide financing for the transactions contemplated by the Merger
Agreement, (ii) MSCI entered into a voting agreement with certain stockholders
of RiskMetrics pursuant to which such stockholders committed to vote in the
aggregate approximately 54.4% of the outstanding shares of RiskMetrics common
stock in favor of the Merger and (iii) MSCI entered into a Non-Competition and
Non-Solicitation Agreement with Ethan Berman, the chief executive officer of
RiskMetrics, in each case, as more fully described below.
The Merger
Agreement
At the effective time and as a result
of the Merger, each outstanding share of RiskMetrics common stock will be
converted into the right to receive a combination of (i) 0.1802 shares of MSCI
Class A common stock and (ii) $16.35 in cash, without interest.
Consummation of the Merger is subject
to certain conditions, including (i) the adoption of the Merger Agreement by
RiskMetrics’ stockholders, (ii) the absence of any law or order prohibiting the
closing, (iii) the receipt in full of the debt financing for the
transaction, (iv)
the expiration or termination of the applicable Hart-Scott-Rodino waiting period
and receipt of certain foreign antitrust approvals, (v) subject to certain
exceptions, the accuracy of representations and warranties, (vi) the
effectiveness of the registration statement for the MSCI Class A common stock
being issued in the Merger and (vii) certain other customary closing
conditions.
MSCI and RiskMetrics have made
customary representations, warranties and covenants in the Merger Agreement,
including, among others, covenants to conduct their respective businesses in the
ordinary course consistent with past practice between the execution of the
Merger Agreement and consummation of the Merger and to use reasonable best
efforts to cause the Merger to be consummated. In addition,
RiskMetrics has covenanted (i) to cause a stockholder meeting to be held to
consider approval of the transactions contemplated by the Merger Agreement, (ii)
subject to certain exceptions, for its board of directors to recommend adoption
of the Merger Agreement by RiskMetrics’ stockholders, (iii) not to solicit
proposals relating to alternative business combination transactions and (iv)
subject to certain exceptions, not to enter into discussions concerning or
provide confidential information in connection with alternative business
combination transactions.
Prior to adoption of the Merger
Agreement by RiskMetrics’ stockholders, RiskMetrics’ board of directors may, in
certain circumstances, change its recommendation with respect to the Merger in
response to a Superior Proposal or an Intervening Event (in each case, as
defined in the Merger Agreement) upon compliance with certain notice and other
specified conditions set forth in the Merger Agreement.
The Merger Agreement contains certain
termination rights for both MSCI and RiskMetrics, including (i) the right of
RiskMetrics in certain circumstances to terminate the Merger Agreement to accept
a Superior Proposal (as defined in the Merger Agreement), (ii) the right of MSCI
to terminate the Merger Agreement if RiskMetrics’ board of directors changes its
recommendation with respect to the Merger, (iii) the right of MSCI to terminate
the Merger Agreement between March 29, 2010 and April 2, 2010 if MSCI is unable,
prior to March 29, 2010, to agree with MSSF after good faith negotiations with
MSSF on the terms and conditions of the covenants to be offered to the market in
connection with financing contemplated by the Commitment Letter and (iv) certain
other customary termination rights. The Merger Agreement further
provides that upon termination of the Merger Agreement under specified
circumstances, including the circumstances described in the foregoing clauses
(i) and (ii), RiskMetrics would be required to pay MSCI a cash termination fee
of $50 million. In addition, MSCI is obligated under the Merger
Agreement to pay a cash termination fee of $100 million to RiskMetrics if (x)
the Merger Agreement is
terminated
because the Merger is not consummated by September 1, 2010 and prior to the date
of termination, all closing conditions to MSCI’s obligation to close are
satisfied other than the financing condition or (y) MSCI terminates the Merger
Agreement between March 29, 2010 and April 2, 2010 as described
above. If either party pays the termination fee as described in the
prior sentence, the termination fee will constitute the other party’s sole
remedy against the paying party for the failure to close due to a financing
failure. In addition, the Merger Agreement provides that under
specified circumstances, including if RiskMetrics’ stockholders fail to adopt
the Merger Agreement, RiskMetrics may be required to reimburse MSCI for its
expenses incurred in connection with the transaction, up to $10 million in the
aggregate.
The foregoing description of the Merger
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is filed as Exhibit 2.1
hereto.
The Commitment
Letter
On February 28, 2010, MSCI entered into the
Commitment Letter pursuant to which MSSF has committed to provide senior secured
credit facilities in an aggregate amount of $1,375 million comprised of (i)
$1,275 million under a six-year term loan facility (the “Term Loan”) and (ii) $100
million under a five-year revolving credit facility (the “Revolving Credit Facility”
and, together with the Term Loan, the “Credit
Facilities”). The Credit Facilities are intended to finance
the transaction contemplated by the Merger Agreement, replace MSCI’s and
RiskMetrics’ existing credit facilities and provide ongoing working capital and
liquidity to MSCI.
MSSF’s commitment to provide the Credit
Facilities is subject to several conditions, including the nonoccurrence of a
Material Adverse Effect (as defined in the Commitment Letter) on RiskMetrics,
the negotiation of definitive documentation, MSCI’s satisfaction of a Maximum
Leverage test (as defined in Exhibit B to the Commitment Letter), MSCI obtaining
certain credit ratings within specified periods, MSCI’s delivery of certain
financial statements and a confidential information memorandum to MSSF and other
customary closing conditions more fully set forth in the Commitment
Letter.
The foregoing description of the
Commitment Letter does not purport to be complete and is qualified in its
entirety by reference to the Commitment Letter, which is filed as Exhibit 2.2
hereto, and is incorporated into this report by reference.
The Voting
Agreement
On February 28, 2010, as an inducement
for MSCI and Merger Subsidiary to enter into the Merger Agreement, Ethan Berman,
the chief executive officer of RiskMetrics, and certain investment entities
affiliated with General Atlantic LLC, Spectrum Equity Investors IV, L.P. and TCV
V, L.P. (collectively, the “Supporting Stockholders”),
which collectively own approximately 54.4% of the outstanding shares of
RiskMetrics common stock, entered into a Voting and Irrevocable Proxy Agreement
(the “Voting Agreement”)
with MSCI. The Voting Agreement provides that the Supporting
Stockholders will vote (or cause to be voted) all of their shares of RiskMetrics
common stock (i) in favor of, among other things, the approval and adoption of
the Merger Agreement and (ii) against, among other things, any alternative
business combination involving RiskMetrics.
The Supporting Stockholders’ agreements
to vote their shares of RiskMetrics common stock as described above is subject
to the limitation that if RiskMetrics’ board of directors changes its
recommendation in response to an Intervening Event (as defined in the Merger
Agreement), the Supporting Stockholders’ are required to vote in the aggregate
approximately 35% of the outstanding shares of RiskMetrics common stock in favor
of the Merger, with the remaining shares voted in the Supporting Stockholders’
sole discretion.
Each Supporting Stockholder has also
granted an irrevocable proxy appointing MSCI as such Supporting Stockholder’s
attorney-in-fact to vote his or its shares covered by the aforementioned voting
obligations as required.
Each Supporting Stockholder has agreed
that, other than according to the terms of the Voting Agreement, it will not (i)
grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any shares of RiskMetrics common stock
or (ii), subject to certain limited exceptions, transfer, sell or otherwise
dispose of any shares of RiskMetrics common stock during the term of the Voting
Agreement. Mr. Berman has also
agreed to
exercise all of his options to acquire shares of RiskMetrics common stock within
five business days prior to the completion of the Merger to the extent he has
not previously exercised such options.
The Voting Agreement will terminate
upon the earliest of (i) the adoption of the Merger Agreement by the RiskMetrics
stockholders, (ii) the conclusion of a RiskMetrics stockholder meeting at which
the stockholders failed to approve the Merger Agreement, (iii) November 28, 2010
and (iv) the termination of the Merger Agreement in accordance with its terms or
any amendment to the Merger Agreement that reduces the per share Merger
consideration, changes the kind or form of, or the cash/equity per share
allocation of, consideration to be received (other than by adding cash
consideration) or amends the termination provisions of the Merger
Agreement.
The foregoing description of the Voting
Agreement does not purport to be complete and is qualified in its entirety by
reference to the Voting Agreement, which is filed as Exhibit 2.3 hereto, and is
incorporated into this report by reference.
Non-Competition and
Non-Solicitation Agreement
On February 28, 2010, MSCI, RiskMetrics
and Ethan Berman, the chief executive officer of RiskMetrics, entered into a
non-competition and non-solicitation agreement (the “Non-Competition and Non-Solicitation
Agreement”) pursuant to which Mr. Berman agreed that, during the period
from the completion date of the Merger until December 31, 2011, he will not (i)
engage in any business that competes with any business engaged in or actively
planned to be engaged in by RiskMetrics as of the completion date of the Merger,
(ii) solicit certain employees of RiskMetrics or MSCI or (iii) solicit certain
clients or customers of RiskMetrics’ business or MSCI’s risk analytics
business.
The foregoing description of the
Non-Competition and Non-Solicitation Agreement does not purport to be complete
and is qualified in its entirety by reference to the Non-Competition and
Non-Solicitation Agreement, which is filed as Exhibit 2.4 hereto, and is
incorporated into this report by reference.
Item 8.01. Other
Events
On March 1, 2010, MSCI and RiskMetrics
issued a joint press release announcing the execution of the Merger Agreement.
The press release is attached as Exhibit 99.1 and is incorporated herein by
reference.
Additional
Information
The
Merger Agreement has been included to provide security holders with information
regarding its terms. It is not intended to provide any other factual
information about MSCI or RiskMetrics. The representations,
warranties and covenants contained in the Merger Agreement were made solely for
purposes of such agreement and as of specific dates, were solely for the benefit
of the parties to the Merger Agreement, may be subject to limitations agreed
upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the
parties to the Merger Agreement instead of establishing these matters as facts,
and may be subject to standards of materiality applicable to the contracting
parties that differ from those applicable to security
holders. Security holders are not third-party beneficiaries under the
Merger Agreement and should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of MSCI or RiskMetrics. Moreover, information
concerning the subject matter of the representations and warranties may change
after the date of the Merger Agreement, which subsequent information may or may
not be fully reflected in RiskMetrics’ or MSCI’s public
disclosures.
Item
9.01. Financial Statements and Exhibits
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2.1
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Agreement
and Plan of Merger dated as of February 28, 2010 among MSCI Inc., Crossway
Inc. and RiskMetrics Group, Inc.
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2.2
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Commitment
Letter dated as of February 28, 2010 among MSCI Inc. and Morgan
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Stanley
Senior Funding, Inc. |
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2.3
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Voting
and Irrevocable Proxy Agreement dated as of February 28, 2010 among MSCI
Inc. and the stockholders named therein
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2.4
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Non-Competition
and Non-Solicitation Agreement dated as of February 28, 2010 between MSCI
Inc. and Ethan Berman.
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99.1
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Press
Release issued jointly by MSCI Inc. and RiskMetrics Group, Inc., dated
March 1, 2010
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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MSCI
Inc.
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Date:
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March
1, 2010
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By:
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/s/
Henry Fernandez
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Name:
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Henry
Fernandez
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Title:
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Chief
Executive Officer
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INDEX
TO EXHIBITS
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2.1
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Agreement
and Plan of Merger dated as of February 28, 2010 among MSCI Inc., Crossway
Inc. and RiskMetrics Group, Inc.
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2.2
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Commitment
Letter dated as of February 28, 2010 among MSCI Inc. and Morgan Stanley
Senior Funding, Inc.
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2.3
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Voting
and Irrevocable Proxy Agreement dated as of February 28, 2010 among MSCI
Inc. and the stockholders named therein
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2.4
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Non-Competition
and Non-Solicitation Agreement dated as of February 28, 2010 between MSCI
Inc. and Ethan Berman.
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99.1
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Press
Release issued jointly by MSCI Inc. and RiskMetrics Group, Inc., dated
March 1, 2010
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