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Majority stake in terminals and data business sold for $17 billion

Thomson Reuters agreed to sell a controlling stake in its financial terminals and data business for $17 billion to US private equity group Blackstone.

The deal for the financial and risk business was announced by the companies in a statement that said under “a strategic partnership” with Blackstone Thomson Reuters will retain a 45 per cent holding and will receive approximately $17 billion, including about $3 billion in cash and $14 billion of debt and preferred equity issued by the new business.

The biggest sticking point during negotiations had been what the partnership would mean for Reuters News, which supplies the Thomson Reuters Eikon terminal with headlines, stories and analysis, two sources familiar with the matter told Reuters.

Under the terms of the deal, approved by the Thomson Reuters board today, Reuters News remains part of Thomson Reuters, along with its legal and tax and accounting divisions.

Thomson Reuters and the Thomson Reuters Founders Share Co, which has overseen Reuters’ editorial independence since the company was publicly listed in 1984, have agreed to “consequential modifications” to the 1941 Trust Principles that guide the news reporting division and, since the 2008 acquisition of Reuters by Thomson, the entire merged business.

The statement did not give any more details.

A source familiar with the matter told Reuters there would be no change in the commitment of Reuters News to “independence,” “freedom from bias,” and supplying “reliable news” in keeping with the Trust Principles.

Kim Williams, chairman of the Thomson Reuters Founders Share Company, was not available for immediate comment.

The new F&R company will make minimum annual payments of $325 million to Reuters to secure access to its news service, equating to almost $10 billion. Thomson Reuters chief financial officer Stephane Bello told an investor call that the payment represented what F&R used to allocate to Reuters News.

Reuters also makes money selling news to broadcasters, websites, newspapers, and other media organisations around the world. In 2016, Reuters reported $304 million revenue from its media business.

Thomson Reuters CEO James Smith wrote in a message to staff: “This is an incredibly exciting opportunity which we believe will maximize the value creation of F&R, unlock its future potential and strengthen its competitive position across financial markets.”

He added:For Reuters, the news agreement with Blackstone will ensure continued support and presence for the world’s most respected news organization. F&R will continue to be the principal customer for Reuters under a 30-year agreement for news and editorial content. 

“We live in a time in which trusted news has never been more important and yet has never been harder to sustain as a business. I could not be more pleased to know that Reuters will continue to shine, operating with the same editorial independence and rigor, and ever greater commercial viability.”

F&R includes the flagship Eikon trading terminal. It accounted for more than half of Thomson Reuters’ revenues last year.

Reuters reported the Canada Pension Plan Investment Board and Singapore’s GIC will invest alongside Blackstone but the statement did not specify the size of their stakes. The Canada Pension Plan Investment Board declined to comment. GIC could not immediately be reached for comment.

The new partnership will be managed by a 10-person board composed of five representatives from Blackstone and four from Thomson Reuters. The President and CEO of the new partnership will serve as a non-voting member of the board following the closing of the transaction. The companies did not say who that person would be. The current president and CEO of the F&R business is David Craig.

Talks to sell Blackstone a stake in the business first began in the summer, two sources familiar with the negotiations said.

Thomson Reuters expects the transaction to close in the second half of 2018.

Thomson Reuters said it will use the bulk of the $17 billion proceeds from the transaction, estimated at $9 billion to $11 billion, to buy back shares in a bid/tender offer to all common shareholders on the close of the deal.

It said it will also use proceeds to pay down debt and invest in it legal and tax & accounting units and make selective acquisitions.

Woodbridge, the investment vehicle of Canada’s Thomson family and Thomson Reuters principal shareholder, will participate in the bid/tender offer. Woodbridge intends to keep its 50 per cent to 60 per cent ownership of Thomson Reuters, the statement said. ■