Canadian media group Thomson mapped out its plans Tuesday for a possible £8.8 billion ($17.6 billion) bid to acquire the news and financial information group Reuters in order to create a 'global leader' in business information.
Should it go through, the deal would create a new company called Thomson-Reuters valued on the market at some 23 billion pounds and with a workforce of almost 50,000, Thomson said. Under the plans, Reuters' current financial and media business would be merged with the Thomson Financial operation, becoming a subsidiary of the Thomson-Reuters parent. In their statements, Thomson and Reuters said the two groups would be a good fit, with Reuters being strong in Europe and Asia and supplies much of its information to traders, while Thomson is focused on North America and on serving investment bankers.
The companies said that the deal promised to generate some $500 million a year in cost savings within three years. But the proposed deal was a 'large and complex' transaction and there was 'no assurance' that it will in fact be reached. It would be subject to approval by the Reuters Founders Share Company, which has special powers to block a takeover. Under the specifics of the proposed acquisition, the Thomson family holding company Woodbridge would own 53% of the shares of the new company. Thomson shareholders would hold 23% and Reuters shareholders would own 24% of the combined business in the cash and share deal. Investors would receive 352.5 pence per share plus 0.16 Thomson shares, valuing Reuters' shares at 697p based on Thomson's closing price on Monday.
Reuters shares had already surged last Friday, closing 25% higher on the FTSE 100 Index after the company said it had been approached by Thomson. The Canadian company confirmed on Sunday that discussions were under way. In an earlier statement Tuesday, Reuters confirmed the buyout offer talks with Thomson and said that because of the speculation about a bid from Thomson, „both boards thought that it was in the shareholders' interests to clarify the status of the discussions.”
Reuters was founded in 1851 by Paul Julius Reuter to transmit stock market quotations between London and Paris via the new Calais- Dover cable. It now has 16,800 staff and a presence in 131 countries. Thomson has about 32,000 staff in 37 countries, focused on delivering specialist information in finance, tax and accountancy, law, healthcare, education and science. London analysts estimated that the combined group would have a 34% share of the financial data market, edging ahead of US rival Bloomberg. (monstersandcritics.com)