Thomson in talks to buy Reuters for $17.6 bln

LONDON - Canadian publisher Thomson Corp is in talks to buy Reuters Group Plc for about 8.8 billion pounds ($17.6 billion) to create the world’s biggest news and financial data company, the two firms said on Tuesday.



By (Reuters)

Published: Tue 8 May 2007, 7:26 PM

Last updated: Sat 4 Apr 2015, 10:57 PM

Under the terms of the proposed deal, Reuters CEO Tom Glocer would become chief executive of a dual-listed group to be called Thomson-Reuters, the companies said in a joint statement.

Reuters investors would get 352-1/2 pence in cash and 0.16 Thomson stock for each share, equivalent to 697 pence a share at Monday’s closing prices.

That would be 42 percent above Reuters close on Thursday, the day before it announced a bid approach. The deal value is based on the number of outstanding Reuters shares.

Reuters shares rose as much as 7 percent to a five-year high of 659 pence in early trade. At 1145 GMT, they were up 2.2 percent at 629 pence, well short of the proposed bid price, on concerns about the length of time to complete a deal and possible obstructions from competition regulators.

“We would expect close US and EC (European Commission) regulatory scrutiny,” Credit Suisse analysts said in a note.

Thomson, whose publishing interests span law, tax and scientific research, has been building up its financial data business as it looks to tap into booming global markets.

Currently third with 11 percent of the world’s $12.5 billion market data business, Thomson would jump to 34 percent with Reuters, putting it just ahead of privately-owned Bloomberg on 33 percent, according to Inside Market Data.

A deal would add Reuters strength in sales and trading to Thomson’s base with money managers and investment bankers.

The talks come amid a frenzy of dealmaking in the media sector. Last week Rupert Murdoch’s News Corp made a $5 billion bid for Wall Street Journal owner Dow Jones & Co Inc., which was rebuffed by Dow Jones’ controlling investors.

Thomson and Reuters said they expected to make over $500 million of annual synergies within three years of completion of a deal, which could come this or next year.

”Although a rival bid cannot be ruled out, given the scale of synergies on offer (and therefore healthy premium offered) ... we view Thomson as the bidder best placed to secure Reuters,” Numis Securities analysts wrote in a research note.

The combined Thomson Financial unit and Reuters financial and media businesses would be called Reuters, and adopt the Reuters trust principles aimed at protecting the independence of its news, the companies said. The Reuters Founders Share Co, run by 15 trustees, has a “golden share” and could block a takeover.

“It should be emphasised that discussions are at a stage where there can be no assurance that agreement will be reached. No transaction will be announced without the support of the Reuters Founders Share Company,” the companies said.

Thomson-Reuters

The Thomson family bought its first newspaper in 1934 and built a publishing empire which for a time included the Times newspaper and Scottish Television.

It branched into other fields, including creating a travel business that still bears its name, before focusing more recently on electronic publishing. It is in talks to sell its education unit, which analysts say could raise about $5 billion.

Reuters was founded by German-born immigrant Paul Julius Reuter in 1851 when he opened an office to transmit stock market quotes between London and Paris via the new Calais-Dover cable.

The Thomson family, which owns about 70 percent of the Canadian group, would vote in favour of a deal with Reuters, the companies said. The family, through its Woodbridge vehicle, would own 53 percent of Thomson-Reuters.

Other Thomson shareholders would own 23 percent of the combined business and Reuters shareholders would own 24 percent. The deal is subject to approval by both sets of shareholders.

Under the proposed deal, a so-called equalisation agreement would mean that both companies’ primary listings would be maintained. This should allow the two companies to remain in their existing equity indexes, the companies said.

“I like the fact there is a dual listing, so you can retain an interest in the company or have that option,” said Tim Rees, a fund manager at Insight Investment whose funds own more than 13 million Reuters shares. He also thought the level of synergies available to Thomson made a counterbid unlikely.

Thomson President and CEO Richard Harrington would retire on completion of the deal, at which point Reuters’ Glocer would become chief executive of the combined company.

Shares in Thomson, which has is headquarters in Stamford, Connecticut, closed at 47.23 Canadian dollars on Monday, valuing the business at about C$30.8 billion ($27.9 billion).

(Reporters and editors involved in the writing and editing of this report may own Reuters securities and are bound by the Reuters Code of Conduct, which restricts dealing in securities in companies a journalist is reporting on)


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