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From the Globe online:
Thomson in takeover talks with Reuters
ERIC REGULY
Globe and Mail Update
May 4, 2007 at 9:37 AM EDT
ROME — Thomson Corp. is in talks to buy Reuters Group PLC and hopes to strike a deal soon to buy the once high-flying British financial data and news provider, people close to the companies confirmed this morning.
The sources, however, denied that Thomson's effort to buy Reuters is in reaction to Rupert Murdoch's bid for Dow Jones & Co., owner of The Wall Street Journal in a rapidly consolidating media market. “Thomson is a big thoughtful company that makes long-range plans and doesn't do hostile deals,†said a source. “Reuters is not an instant decision on Thomson's part.â€
Rumours of takeover bids for Reuters have hit the markets every few years, more so lately because of the recent dramatic fall in the company's share price. This morning, after Reuters confirmed it had been approached by a suitor, the shares rose 26 per cent to 622 pence, valuing the company at about £7.8-billion.
The sources said Thomson sees a complementary fit with Reuters, a “hand-in-glove opportunity,†said one. Both are providers of electronic financial data. Thomson, through Thomson Financial, has a strong corporate presence in the United States and is popular among “buy-side†institutions. Reuters' products are popular in Britain and in continental Europe, especially among the “sell-side†institutions.
Thomson in takeover talks with Reuters
Sources confirm Thomson Corp. is in talks to buy Reuters Group PLC; Reuters shares surge after it confirms talks with unnamed suitor (Reuters)
Any negotiations to buy Reuters would be delicate because the presence of a “golden share†can be used to block unwanted takeovers. Furthermore, the ownership structure dictates that no shareholder can hold more than 15 per cent of the company. A takeover would be virtually impossible without the consent of the 15 trustees charged with ensuring the “independence, impartiality, integrity and freedom from bias†of the company.
An investment banker in London said he didn't think Rupert Murdoch would attempt a rival bid for Reuters. But he said the big private-equity players are bound to take an interest Reuters, a globally famous brand.
A purchase by the Toronto-based company would come just as it's disposing of its Thomson Learning educational division, expected to close by September. Analysts have said the division, which sells textbooks and educational software, could glean as much as $6-billion (U.S.).
Because of that sale, Thomson “has sufficient funds and sufficient credit lines to acquire Reuters,†said Denis Durand, senior partner at Montreal-based Jarislowsky Fraser Ltd., which holds Thomson shares.
“It would be possible and a good fit, but it's always a question of price and how fast it can have an impact on earnings.â€
Analysts said only a small number of companies could afford Reuters. At Friday's share price, it has an enterprise value (net debt and equity) of more than $18-billion. Reuters and Thomson Financial are direct competitors in some products. Combining the two would could create valuable synergies.
With Reuters at its side, Thomson would derive about 50 per cent of its EBITDA — earnings before interest, taxes, depreciation and amortization — from Thomson Financial, up from abut 30 per cent now.
With files from Tavia Grant.
AoD
Thomson in takeover talks with Reuters
ERIC REGULY
Globe and Mail Update
May 4, 2007 at 9:37 AM EDT
ROME — Thomson Corp. is in talks to buy Reuters Group PLC and hopes to strike a deal soon to buy the once high-flying British financial data and news provider, people close to the companies confirmed this morning.
The sources, however, denied that Thomson's effort to buy Reuters is in reaction to Rupert Murdoch's bid for Dow Jones & Co., owner of The Wall Street Journal in a rapidly consolidating media market. “Thomson is a big thoughtful company that makes long-range plans and doesn't do hostile deals,†said a source. “Reuters is not an instant decision on Thomson's part.â€
Rumours of takeover bids for Reuters have hit the markets every few years, more so lately because of the recent dramatic fall in the company's share price. This morning, after Reuters confirmed it had been approached by a suitor, the shares rose 26 per cent to 622 pence, valuing the company at about £7.8-billion.
The sources said Thomson sees a complementary fit with Reuters, a “hand-in-glove opportunity,†said one. Both are providers of electronic financial data. Thomson, through Thomson Financial, has a strong corporate presence in the United States and is popular among “buy-side†institutions. Reuters' products are popular in Britain and in continental Europe, especially among the “sell-side†institutions.
Thomson in takeover talks with Reuters
Sources confirm Thomson Corp. is in talks to buy Reuters Group PLC; Reuters shares surge after it confirms talks with unnamed suitor (Reuters)
Any negotiations to buy Reuters would be delicate because the presence of a “golden share†can be used to block unwanted takeovers. Furthermore, the ownership structure dictates that no shareholder can hold more than 15 per cent of the company. A takeover would be virtually impossible without the consent of the 15 trustees charged with ensuring the “independence, impartiality, integrity and freedom from bias†of the company.
An investment banker in London said he didn't think Rupert Murdoch would attempt a rival bid for Reuters. But he said the big private-equity players are bound to take an interest Reuters, a globally famous brand.
A purchase by the Toronto-based company would come just as it's disposing of its Thomson Learning educational division, expected to close by September. Analysts have said the division, which sells textbooks and educational software, could glean as much as $6-billion (U.S.).
Because of that sale, Thomson “has sufficient funds and sufficient credit lines to acquire Reuters,†said Denis Durand, senior partner at Montreal-based Jarislowsky Fraser Ltd., which holds Thomson shares.
“It would be possible and a good fit, but it's always a question of price and how fast it can have an impact on earnings.â€
Analysts said only a small number of companies could afford Reuters. At Friday's share price, it has an enterprise value (net debt and equity) of more than $18-billion. Reuters and Thomson Financial are direct competitors in some products. Combining the two would could create valuable synergies.
With Reuters at its side, Thomson would derive about 50 per cent of its EBITDA — earnings before interest, taxes, depreciation and amortization — from Thomson Financial, up from abut 30 per cent now.
With files from Tavia Grant.
AoD
