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'Advanced talks' to sell Thomson Reuters' biggest business

Thomson Reuters is in advanced discussions with a US private equity buyout firm to sell a majority stake in its financial and risk business, the company said in a statement late on Monday.

The Thomson Reuters board is expected to meet on Tuesday to discuss Blackstone’s $17 billion cash offer for the business, which supplies news, data and analytics to banks and investment houses around the world. F&R has annual sales of $6.1 billion and contributes more than half of Thomson Reuters’ annual revenues. Blackstone would buy a stake of approximately 55 per cent in the group’s largest division, leaving Thomson Reuters with a minority interest. Reuters quoted three sources familiar with the matter for its report on the proposed deal.

Thomson Reuters said in a statement that “it is in advanced discussions with Blackstone regarding a potential partnership in its F&R business.” The company gave no more details and a spokeswoman for Blackstone declined to comment.

If the board agrees to a deal with Blackstone, it would represent the biggest shake-up of Thomson Reuters since it was formed by Canada’s Thomson Corp acquisition of Reuters in 2008. Thomson bought the then London-based Reuters for 8.7 billion pounds, worth $17 billion at the exchange rate at the time.

Under the terms of the Blackstone offer, Thomson Reuters would retain a 45 per cent stake in the F&R business as part of a partnership, according to the sources. Reuters was unable to determine who would lead the newly formed company. The F&R business is headed by David Craig.

Thomson Reuters would hold on to its international news service, Reuters, along with its legal and tax and accounting divisions. Reuters is expected to continue to supply news to F&R’s flagship desktop product, Eikon, as well as to other products, though the details of the arrangement could not be determined.

The sources cautioned that a deal had not been finalised and could still fall apart. They declined to be identified because the negotiations are confidential.

Reuters said it is unclear how the proposed deal would be viewed by trustees of the Thomson Reuters Founders Share Company, which was set up to oversee Reuters’ editorial independence when the company was first publicly listed in London and New York in 1984. 

The trustees approved Thomson’s deal for Reuters in 2008. The Founders Share Company’s newly-appointed current​ chairman Kim Williams did not respond to requests for comment, Reuters said.

Blackstone’s investment, if finalised, will put the buyout firm in direct competition with Bloomberg as well as News Corp’s Dow Jones division in selling data services, analytical and trading tools to Wall Street.

Canada’s Thomson family controls more than 63 per cent of Thomson Reuters shares through its family investment company Woodbridge. Thomson Reuters has a market value of about $31 billion and its shares trade on the New York and Toronto stock exchanges.

Since its creation in 2008, Thomson Reuters has carried out more than 200 acquisitions, but has struggled to integrate some of the assets it took on, especially in its F&R division, which was hit hard by the financial crisis.

Growth in the business has slowed as banks and brokerages shrank in the face of weak trading. But amid tougher regulations around risk-taking, the regulation and compliance business has been a bright spot.

To streamline its business, Thomson Reuters has reduced the number of products within its F&R segment while shrinking its workforce.

The company has also sought to sell non-core assets, including its intellectual property and science business, which it sold to private equity firms Onex Corp and Baring Private Equity Asia for $3.55 billion in 2016.

Shares of Thomson Reuters have fallen nine per cent over the past 12 months compared to a three percent rise in the Toronto Stock Exchange's main index.

This story has been updated to make clear the all-cash offer to buy 55 per cent of Thomson Reuters' F&R business is $17 billion. ■