Thomson received approval from regulators in Europe, the US and Canada to acquire Reuters last Tuesday (19 February) in a deal that will create the world’s biggest provider of financial news and data.
In order to meet the conditions of the US Department of Justice, Europe’s Competition Commission and the Canadian Competition Bureau, Thomson and Reuters have agreed to sell copies of the Thomson Fundamentals Worldscope database, Reuters Estimates, Reuters Aftermarket Research and Reuters Economics (EcoWin) databases.
The sales include copies of the databases, source data and training materials, as well as certain contracts and an undisclosed number of staff employees, but Thomson and Reuters retain ownership of the data, the companies said in a statement.
The revenue from the databases may be well below $50 million, Deutsche Bank analyst Mark Braley wrote in a note to clients. Because only copies are being sold, the impact on the combined company will be "in no way material," he says. The combined revenues of the new Thomson Reuters group are expected to be $13 billion-plus.
During a conference call, Tom Glocer, CEO of Reuters and CEO designate of Thomson Reuters, said the company was in preliminary discussions with several parties about selling the databases, although he declined to say who the parties were.
The companies expect the acquisition to close in the week of 13 April, following shareholder and court approvals. The companies are not required to complete the database sales before the closing of the transaction.
Thomson announced its takeover in May last year (Squawkbox, 7 May, 2007) in a deal that values Reuters at around 627 pence per share or £7.9 billion pounds ($15.4 billion) based on the value of the two companies' shares shortly after the regulators’ decisions were released.
The merger benefits the companies in many ways. The acquisition of London-based Reuters, a 156-year-old news organisation with 2,400 journalists in more than 130 countries, will triple Toronto-based Thomson's share of the financial data market to 34%, according to independent research from Inside Market Data Reference.
This means the two companies are better placed to take on their rival Bloomberg, which according to industry figures has a 33% share.
The three companies compete against each other in the terminal market, providing news and financial data on currencies, stocks and bonds to banks, traders and brokerages.
Reuters’ strength in sales and trading, in particular across Europe and Asia, will also complement Thomson Financial’s strength in North America and its client base of money managers.
In addition, Reuters’ global news service would significantly boost Thomson’s US news operations and European AFX News wire service.
In a statement, Glocer said of the regulators’ approvals: "This is an important step toward completing the transaction and creating what we believe will be the leading provider of information and related applications to businesses and professionals around the world."