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Bridging the Thomson Reuters gap

Tuesday 6 May 2008

Shares of Thomson Reuters listed in London continue to trade at a huge discount to those listed in Toronto, the Financial Times reported. Dual-listed shares rarely trade perfectly efficiently, the FT's Lex column said, but a gap of this scale, about one fifth, is unheard of.

Technical factors are at play, the FT said. As Thomson Reuters is a dual-listed company, the only way to unwind the classic merger arbitrage trade - long Reuters, short Thomson - is to sell the shares in London and buy in Toronto. Yet the shortage of buyers in London also reflects very different views of the new company’s prospects.

Traditional Canadian holders of Thomson still view it as a defensive professional publisher while the view from London is that the Canadians have no idea what is about to hit them, the FT said. Reuters is still seen as a hostage to the fortunes of its primary customers, the investment banks. “During the last downturn it was clobbered.”

Chief executive Tom Glocer hopes to work on UK shareholders, the FT said. “Either they don’t get the professional side of the business, or they understand the financials side all too well,” it added. ■

SOURCE
Financial Times