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Thomson family tensions surface over Blackstone deal - WSJ

Thomson Reuters chairman David Thomson (photo) was at odds with his family and the company's board over the sale of a majority stake in its core terminals and data business.

The Wall Street Journal reported he was concerned that directors had failed to seek a higher price or consider other potential buyers for control of the financial and risk division, which is being sold to private equity firm Blackstone for $17 billion, according to “people close to the deal”.

Thomson, board chairman and grandson of the family empire’s founder Roy Thomson, ”began airing his objections to other directors after the board started to review Blackstone’s offer in November, but most of them disagreed, the people said”.

He was also overruled by executives of Woodbridge, the private Toronto-based holding company through which Thomson and other members of Canada’s richest family own their 64 per cent stake in Thomson Reuters. 

The Journal said Thomson’s opposition is the latest instance of discord between third-generation Thomsons and the professional managers who oversee core family investments, mainly through Woodbridge. Some of these managers exert significant control over the family’s assets through a structure implemented by Thomson’s father Kenneth to safeguard the multi-billion-dollar fortune. 

The Journal said Blackstone initiated talks to purchase a controlling interest in F&R last summer.

It was quickly championed by Thomson Reuters CEO James Smith as an opportunity to strengthen the company’s core assets, according to the people, the newspaper said.

Smith was strongly supported by two directors: Woodbridge CEO David Binet and Ed Clark, who serves as a protector of the family’s intricate web of holding companies and investments that provide income for dozens of Thomson relatives. Kenneth Thomson, who died in 2006, had reorganised the private family business to create the protector role, usually filled by an outside adviser. 

Sir Kenneth Olisa, a director of Reuters since 2004 and of Thomson Reuters since its formation in 2008, resigned in protest over the Blackstone deal because he shared concerns with both David Thomson and David’s brother and fellow director Peter, the people said. Some other directors initially expressed concern that the company did not seek out other buyers to improve the purchase price, they said. 

“But a majority of directors of Thomson Reuters ultimately lined up behind Messrs. Smith, Binet and Clark because they felt the deal was in the best interest of both the family and minority shareholders, one person close to the deal said.”

The Journal said Clark, Binet and the Thomson brothers did not respond to requests for comment, Thomson Reuters declined to comment, and a Blackstone spokesman had no immediate comment. 

Blackstone’s offer for the Thomson Reuters stake, announced two weeks ago, is structured as a binding deal that remains subject to review only by regulators, people close to the deal told the Journal. No shareholder approval is required and any competing bidder would have to make an offer for all of Thomson Reuters which would significantly raise the price.

The Journal said David Thomson has had difficult relations with some of the Thomson Reuters directors in recent years, according to people close to the company.

“Tensions boiled over last summer when Mr. Smith threatened to resign over what he said was Mr. Thomson’s ‘meddling’ in the company. The board backed Mr. Smith, and Mr. Thomson signed a letter pledging not to interfere in the company’s management, one of the people said. 

“In 2012, Mr. Thomson pushed out a former CEO of Woodbridge, the family holding company, amid tensions over Thomson Reuters’s performance. That same year, one of his cousins fired the CEO of an affiliated family holding company.” 

The Journal noted that Smith was admitted to hospital in Toronto on Monday after “feeling unwell”. There has been no word on his condition since then. ■

The Wall Street Journal