NEW YORK (HedgeWorld.com)–Morgan Stanley Capital International Inc. and Barra Inc. announced today that MSCI would combine with Barra. The two boards of directors have approved, although the contract remains subject to regulatory and Barra shareholder approval.

The parties expect to close on this agreement within two to four months.

“Both companies are leaders in their respective fields, distinguished by a strong research focus and a drive to bring to market innovative products that are instrumental in managing investment portfolios, as well as enterprise-wide investments,” said Henry Fernandez, president and chief executive of MSCI, New York, in a joint statement released April 6.

Barra, headquartered in Berkeley, Calif., and founded in 1975, provides models and tools for financial risk management. In January 2004, for example, it introduced a new web-based system for analyzing credit risk, Barra Credit (see Previous HedgeWorld Story).

MSCI produces indexes used by almost 2,000 organizations around the world. It estimated that more than US$3 trillion is benchmarked to its indexes. The MSCI Hedge Fund Index itself has more than US$1.2 billion of investments linked to it, the company announced in March.

Under the terms of the April 6 agreement, MSCI’s majority shareholder, Morgan Stanley Inc., will acquire Barra for US$41 a share in cash, for an approximate deal value of US$816.4 million, and combine its operations with those of MSCI.

CFaille@HedgeWorld.com