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Morningstar Buys S&P Unit

The fund tracker also beat expectations in the fourth quarter.

Fund tracker


(MORN) - Get Morningstar, Inc. Report

is acquiring Standard and Poor's mutual fund data business from



for $55 million in cash.

The fund data business covers more than 135,000 managed investment vehicles such as mutual funds, exchange-traded funds, hedge funds and offshore funds in 30 countries.

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Additionally, more than 1,100 institutions around the world use Standard and Poor's fund data products. According to terms of the deal, S&P will license fund data from Morningstar after the acquisition is finalized, which is expected in March.

With 80% of S&P's mutual fund data business located outside the U.S, the deal gives Morningstar a stronger foreign presence, particularly in Europe, where S&P has operated for more than 20 years.

After the deal closes, Morningstar expects to reach to about 10,000 new advisors outside the U.S. The company also expects to provide investment data to more than 200 publications and media outlets worldwide.

Morningstar also released its fourth-quarter and full-year 2006 financial results. For the quarter, the company reported consolidated revenue of $87 million, a 43% increase from $60.7 million in the year-ago period.

Consolidated operating income was $20.3 million, up 44% from the same period the year earlier. Net income was $13.6 million, compared with $10.1 million in the fourth quarter of 2005 -- a 35% increase.

For the full year, revenue rose 39% to $315.2 million, compared with $227.1 million for 2005, including $36.4 million from acquisitions.

Operating income grew 67% to $77.5 million in 2006 from $46.5 million a year earlier. Net income jumped 67% to $51.8 million, or $1.11 per diluted share, compared with $31.1 million, or 70 cents per diluted share, in the year-ago period.

Shares of Morningstar were rising $2.07, or 4.2%, to $52.00 in early-morning trading Thursday.