LONDON (AP) — Thomson Corp. said yesterday that Reuters CEO Tom Glocer would lead the combined company if Thomson succeeds in its $17.5 billion bid for Reuters Group PLC, creating the world’s biggest financial news and information provider.
A combined Thomson-Reuters — the name proposed by Thomson — would have a market capitalization of an estimated $45 billion, or a third of the global market, leapfrogging current market leader Bloomberg LP in providing real-time data to traders and investment professionals.
The companies outlined details of the proposed deal for the first time yesterday, revealing that several issues had already been agreed upon even while stressing that nothing had been completed and there was no certainty a deal would be made.
Analysts were optimistic, saying the proposed offer of $7.03 per Reuters share in cash and 0.16 Thomson shares for each Reuters Group PLC share was likely to go ahead without any major obstacles.
While Reuters said discussions continue on a number of “material aspects of the deal,” analysts pointed out that agreement had already been reached on the major points of potential contention such as management issues.
The companies said in the joint statement the new company would retain its primary market listings in Toronto and London, but would be controlled by the Thomson family, which currently owns roughly 70 percent of the equity in Thomson Corp.
The companies said that Mr. Glocer would become CEO of Thomson-Reuters, while Thomson CEO and President Richard Harrington would retire.
Reuters shares closed 2.3 percent higher yesterday at $12.54, after surging 25 percent on Friday when the company announced that it had received a takeover approach but did not name the suitor. Thomson announced Monday that it was the bidder.
Yesterday’s trading was well below the offer price that Thomson said valued each Reuters share at $13.87, based on Thomson’s closing share price of $43.14 on Monday. The value fell further yesterday as Thomson’s shares dropped to $40.83.
Investors could be worried that Thomson may be overpaying. Its U.S. shares fell $1.70, or 4 percent, to $41.13, in afternoon trading yesterday, and Reuters shares that trade in the U.S. fell 35 cents to $76.15, after plunging 3.5 percent earlier in the morning.
Thomson, formally based in Toronto but with its operational head office in Stamford, Conn., has transformed itself in the past decade from an owner of newspapers and other print products into a leading provider of legal and financial information.
The company, which had sales in 2006 of $6.6 billion, has put its book division, Thomson Learning, which provides a quarter of its revenue, up for sale to concentrate on providing information to business and professional markets. Thomson expects to gain an estimated $5 billion from the divestment.
While London-based Reuters is known internationally for its general news operation, that is just a small part of its business. Of the company’s 2006 revenue of $5.11 billion, only $338.3 million came from the media segment — although its news is a key selling point for terminals as well.
Reuters competes with Thomson and Bloomberg in the lucrative field of providing data terminals to the world’s major banks and brokerages. Reuters was the market leader for years before steadily losing ground to Bloomberg.
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