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Talks underway on Dow Jones, S&P merger: report

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McGraw-Hill Companies Inc. (MHP-N) is in advanced talks to merge its S&P Indices business with CME Group Inc.'s (CME-Q) Dow Jones Indexes, a source familiar with the situation said on Thursday.

A deal would bring together some of the oldest and most widely followed U.S. indexes including the Dow Jones Industrial Average and the S&P 500. Under the terms of the deal being discussed, McGraw-Hill would own the majority of the joint venture and manage it, while CME would own about 25 percent, the source said.

News Corp's (NWSA-Q) Dow Jones & Co would also own a minor stake, the source said. The deal has not been finalized and the terms could change, the source said, adding that the talks have been going on for more than a year.

McGraw-Hill and CME declined to comment. News Corp was not immediately available for comment. The story was first reported by the Wall Street Journal.

Standard & Poor's maintains the S&P 500, which was created more than 50 years ago and is one of the most widely followed indexes of large-cap American stocks. Dow Jones Indexes include the well-known Dow Jones Industrial average of 30 blue chip stocks. The brand was created in 1896 by Charles Dow, a company founder.

Dow and S&P create and license indexes that investors and others use to measure the performance of various markets.

Chicago-based CME Group, the world's largest derivatives exchange operator, offers futures and options contracts based on many indexes and pays fees for licensing rights, where it doesn't already own them.

CME bought 90 percent of the Dow Jones' namesake indexes business last year. Earlier this month McGraw-Hill said it would divide itself into a markets data company that includes its Standard & Poor's ratings businesses and an education company for textbook publishing.

The breakup announcement followed public demands starting in July from the Ontario Teacher's Pension Fund and hedge fund Jana Partners LLC for a broad reorganization.

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