ibnlive » Business

Jun 15, 2007 at 09:22am IST

Thomson agrees to buy Reuters

London: Canadian publisher Thomson Corp has agreed to buy Reuters for about 8.7 billion pounds ($17.2 billion) to create the world's biggest financial news and data group, the companies said on Tuesday.

The deal has the support of the Reuters Founders Share Company but still needs regulatory clearance, they said in a joint statement.

The Founders Share Company could have blocked a takeover if it thought Reuters editorial independence was at risk.

"The combination of these two great businesses will create an exceptional global information company guided by the Reuters Trust Principles," Reuters Chief Executive Tom Glocer said in the statement.

The Thomson family, which owns 70 per cent of the Toronto-based group via its Woodbridge holding company, backs the takeover and several Reuters investors have said they believe the offer of 352-1/2 pence and 0.16 Thomson shares for each Reuters share is fair.

At Monday's closing prices, the offer is worth 692 pence per share.

Reuters shares closed at 605-1/2 pence, a discount of 12.5 per cent, reflecting concern that regulators may object to reduced competition in financial data.

Thomson-Reuters will have revenues of about $12 billion and almost 49,000 employees.

With 34 per cent of the financial information market, it will overtake Bloomberg LP, which has 33 per cent, according to industry newsletter Inside Market Data. Thomson, whose publishing interests span law, tax and scientific research, has been building its financial data business as it looks to tap into booming global markets.

It sold its education unit for $7.75 billion in cash last week.

The Thomson family's Woodbridge vehicle will own 53 per cent of the new dual-listed Thomson-Reuters group and support the Reuters Trust Principles of integrity, independence and freedom from bias.

Woodbridge will be granted an exemption to the 15 per cent shareholding limit set by the Reuters Trust Principles as long as it remains controlled by the Thomson family, the companies said.

Thomson and Reuters news and financial businesses will be called Reuters.

Other existing Thomson businesses will be known as Thomson-Reuters Professional.

Reuters Group Chief Executive Tom Glocer will become CEO of Thomson-Reuters, Reuters Chief Operating Officer Devin Wenig will become CEO of the new Reuters while Thomson COO Jim Smith will be CEO of Thomson-Reuters Professional.

Thomson Chief Financial Officer Bob Daleo will be CFO of Thomson-Reuters.

The companies expect to make over $500 million of annual synergies within three years of completion of the deal, which could come this or next year.