End of an era
Wednesday 9 September 2009
A quarter century after Reuters listed its shares on the London stock market to raise capital for acquisitions, an historic milestone has been reached.
The company’s shares have ceased to be traded in the city in which Reuters was founded 158 years ago. In the final session of trading they closed at £18.92, a 1.32 per cent rise on the day. On the first day of trading, 17 April 2008, the closing price was £15.60.
Investors can now buy shares in Thomson Reuters only on the stock exchanges of New York and Toronto. The simpler, more efficient and less costly unified capital structure will save the company £10 million a year in accounting, legal and other costs. It also eliminates the problem of the persistent discount - sometimes as high as 20 per cent - at which the London shares have traded to Thomson Reuters’ North American listings since the merger.
“Importantly, the unification will have no impact on the company’s operations, strategy, financial position or employees, and London will remain a key center for Thomson Reuters,” says Tom Glocer, CEO.
Nevertheless, 9 September 2009 (numerologists might note it as 9/9/9) marks the end of an era. Reuters’ own reporting of it has described the termination of London share trading as distancing Reuters further from its British roots.
Nostalgia aside, does this matter? Reuters long ago recognised the vital importance of the US market. Much money was invested over many decades to build a viable infrastructure in the United States aimed at satisfying the requirements of American subscribers, with only limited success. The takeover by Thomson Corporation of Canada provided the impetus for Reuters to make an impact in the United States on a scale never before possible. That this should have coincided with a period when US markets both for media services and professional products were suffering from an unusually severe period of attrition was an unfortunate accident of timing.
Reuters is now part of a large North American corporation with headquarters in New York where its chief executive, an American, sits. It retains a large presence in London which is where the editor-in-chief, also American, is based. American English rather than British English is now the preferred language for Reuters news. Moreover, the majority of the group’s shareholding and voting power is held in North America. The focus is firmly on the United States as the main market for the company’s growth in the immediate future.
the Trust Principles’ injunction that 'Reuters shall at no time pass into the hands of any one interest, group or faction' proved to be an ultimately surmountable barrier to takeover
Reuters was founded by Paul Julius Reuter, an impecunious German emigré, in two small dark rooms in the heart of London’s financial district on 14 October 1851. It became a public limited company on 20 February 1865, was reconstructed as a private company on 11 December 1916, and became a public company again on 4 June 1984 with shares listed on the London Stock Exchange and the National Association of Securities Dealers Automated Quotations (NASDAQ) in New York.
On that day the editor of The Baron, then editor of the company’s now defunct staff magazine Reuters World, was at the London Stock Exchange to report as the three executive directors of the business – managing director and chief executive Glen Renfrew, deputy managing director and general manager Michael Nelson, and finance director and company secretary Nigel Judah – together with the non-executive chairman Sir Denis Hamilton witnessed the start of trading in Reuters PLC.
The dual flotation in London and on NASDAQ followed decades of precarious financial health that ended when innovative, market-leading products for professionals generated rapid profit growth. Inspired by the founder’s maxim “Follow the cable”, the company stole a march on its competitors by pioneering the use of the latest technology for commercial advantage, first with news retrieval and then screen-based trading. Reuters became a blue chip company with a treasure chest to grow the business exponentially. Acquisitions followed at such a pace that one bedazzled analyst was moved to remark: “Reuters buys companies like most people buy shirts”.
Four days after the flotation Sir Denis declared at the company’s annual luncheon that the Trustees of Reuters Founders Share Company, guardians of the Reuter Trust Principles protecting Reuters’ integrity, independence and freedom from bias and armed with a single all-powerful golden share to deter predators, “will forcefully guarantee that no marauder will get control”.
In the event, the Trust Principles’ injunction that “Reuters shall at no time pass into the hands of any one interest, group or faction” proved to be an ultimately surmountable barrier to takeover and on completion of the acquisition on 17 April 2008 the Principles were adopted as fundamental to the entire business of Thomson Reuters.
As part of a much larger corporate entity, Reuters became more financially secure than at any time in its history. Simultaneously, its guiding ethos developed over the course of a century and enshrined in a legal document was embraced as a code for the conduct of business across a far wider range of activity than might have been envisaged by the founder.
The history of Reuters and the people who made it great is one of energetic ambition, imaginative ingenuity and intrepid adventure. Examples of these can be found in various sections of this website.
The Trust Principles, in their latest iteration, state “that no effort shall be spared to expand, develop and adapt the news and other services and products of Thomson Reuters so as to maintain its leading position in the international news and information business”. Perhaps it is not too fanciful to suppose that Baron de Reuter, who seized upon any opportunity to expand and consolidate his enterprise, would have approved this new chapter in the Reuters story. ■