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Reuters and Thomson Come to Terms

Pundits who predicted that Reuters Founders Share would throw a spanner into Reuters’ potential merger with Thomson Corporation were proved wrong last week; and the merger looks set to go ahead.

 

The Founders Share Company is a group of independent trustees which holds the “golden share”, sometimes called the poison pill, in Reuters. It threw its weight behind the merger saying it had looked very carefully at the proposed business combination of the two firms.

 

In a statement Pehr Gyllenhammar, chairman of the trustees said: “We believe that the formation of Thomson-Reuters marks a watershed in the global information business, and will underpin the strength, integrity and sustainability of Reuters as a global leader in news and financial information for many years to come”.

 

Also Woodbridge, the Thomson family holding company which controls approximately 70% of Thomson, has irrevocably committed to vote in favour of the transaction. The boards of Thomson and Reuters said last week that they would recommend the transaction to their shareholders.

 

It is the end of an era for Reuters, which started business delivering news by carrier pigeon over 150 years ago. The onset of information delivery via the Internet has thrown most market data vendors out of the market, with the rest either seeking niche markets or merging to stay afloat.

 

The boards said they believe there is “a natural fit and compelling logic” in combining the two firms, citing the depth of information and electronic delivery that will be brought to bear.

 

There will be a dual listed company structure with remaining separate legal entities but managed and operated as if they were a single economic enterprise. The boards will be combined and act as boards to both companies, and the combined business will be managed by a single executive team.

 

The combined business will be called Thomson-Reuters and the combined Thomson Financial unit and Reuters financial and media businesses will be called Reuters.

 

Reuters CEO, Tom Glocer will become CEO of the combined business at the time the transaction closes. Devin Wenig, currently COO of Reuters, will be CEO of Reuters, the combined Thomson Financial unit and Reuters financial and media businesses. 

 

Thomson president and CEO, Richard J. Harrington will retire at the completion of the transaction.  

 

The transaction is subject to anti-trust clearances.

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