The S&P 500 and the Dow Jones industrial average will be united under the same ownership umbrella, bringing together two of the biggest names in indexing in an entity that generates more than US$400 million in annual revenue.

The new entity, S&P/Dow Jones Indices, will be 73% owned by McGraw-Hill, the parent of Standard & Poor’s, the companies said in a joint press release. CME Group, which owns most of Dow Jones Indexes, will hold a 24.4% stake in the venture, while Dow Jones & Co. Inc. will hold a 2.6% stake. The transaction has the approval of both companies’ boards.

The two widely used benchmarks in the world of investing having the same owners potentially means they would have a clear edge over other indexing-industry competitors, notably MSCI, which was outbid by CME Group last year in its attempt to acquire Dow Jones Indexes from Dow Jones & Company Inc. CME Group now owns 90% of Dow Jones Indexes, while Dow Jones & Co., the News Corp. unit, currently holds a 10% stake.

The transaction could unleash a wave of mergers and acquisitions in a growing industry that is now turning its attention to expanding in fast-growing, emerging-market countries. The popularity of indexing has grown rapidly in the past decade.

“S&P/Dow Jones Indices is expected to be operational in the first half of 2012, subject to regulatory approval and customary closing conditions,” the companies said in the press release.