Just 24 hours before Reuters CEO Tom Glocer was scheduled to give a keynote presentation at the ACI’s 46th World Congress in
Reuters confirmed that it had been approached about a takeover in a statement, but declined to reveal its suitor. However, sources close to Thomson Financial confirmed that it has made a bid. Various newspaper reports estimated that Thomson was bidding more than GBP 7.5 billion for Reuters.
As the news filtered through, Reuters share prices raced up to over 650p on Friday and closed at 615.75p, up 123.5p on the day. Its share prices have struggled to stay above 400p since 2003 when it became clear to analysts and investors that Reuters had not exactly embraced the Internet culture; and was hugely overstaffed and lumbered with massive overheads.
Thomson Financial, the financial information and technology arm of Thomson Corp, has been searching for news and data partners for some time. It did a joint venture news deal with Dow Jones in 2004 to fill that gap, and rumours were rife at the time that Thomson was looking to buy Dow Jones. Now, of course, it is Rupert Murdoch’s News Corp. which is taking on the Bancroft family, which owns the lion’s share of Dow Jones.
Instead, Thomson Financial bought AFX, the business news arm of Agence France Presse, in June of 2006; but it is thought that AFX with only 100-odd journalists globally, was too small to fill the gap.
Reuters would do nicely, as its business news is well regarded and it has thousands of journalists and news bureaux or partnerships worldwide. The market data feeds and archives are another treasure for Thomson, as are Reuters’ market data technology platforms and transaction systems. Thomson Financial has had a decade-long struggle to update its own market data distribution and trading technology, and its latest iteration called Thomson One is not thought to be gaining much ground.
Any takeover of Reuters will be subject to approval from the Reuters Founders Share, a private company that protects Reuters against any infringement on its journalistic independence. This so-called “golden share” can be used to veto any takeover deal, and has been said to have put off suitors even larger and more powerful than Thomson in the past, however sources familiar with the bid suggest that Reuters has out a “minimum” bid of 750p per share on itself. This would suggest, the sources argue, that Thomson’s bid could be acceptable to Reuters Founders Share, although others argue that the price reportedly quoted puts Reuters out of Thomson’s reach.