Reuters, Thomson Lay Out Merger Details

Firm Would Be No. 1 Market-Data Provider

The Reuters headquarters building in London, Friday May 4, 2007. (Alastair Grant - AP)

Thomson Corp.'s $18 billion cash-and-stock bid for Reuters Group would create a new market-data company called Thomson-Reuters that would be run by the Reuters chief executive and protect the news service's journalistic independence, the companies said yesterday.

In the first acknowledgment of the bid, which was reported last week, the companies detailed plans to create the world's largest provider of financial market data and trading systems to investing professionals. Currently second and third in the marketplace, respectively, Reuters and Thomson, if combined, would edge out market leader Bloomberg, owned by New York City Mayor Michael R. Bloomberg.

The new company would be run by Reuters chief executive Thomas H. Glocer, 47. Thomson chief executive Richard J. Harrington, 60, would retire after the merger is completed.

Thomson is a family-controlled public company based in Toronto with deep Canadian roots, though it operates out of Stamford, Conn. Woodbridge, the Thomson family holding company, would own 53 percent of the new firm. Thomson shareholders would own 23 percent, with Reuters shareholders owning 24 percent, the companies said.

In the deal, Reuters stockholders would be paid a 43 percent premium for their shares and get 0.16 of a Thomson share for each Reuters share owned. Reuters shares closed down $1.09 yesterday, at $75.41. Shares of Thomson closed down $1.53, at $41.30.

As part of the deal, Reuters would declare a dividend of 24 cents per share.

Some analysts said the deal would raise antitrust concerns among government regulators, who have the authority to block it, and others said it makes sense for its efficiencies.

Thomson gets most of its revenue from U.S. sales, while the majority of Reuters's revenue comes from Europe. "In the '80s and early '90s, Reuters was gold-plate," said David Anderson, editor of Inside Market Data Reference, a British publication that covers the market-data industry. "But frankly, Bloomberg has taken their crown."

Anderson said Bloomberg and Reuters have different business models. Bloomberg, the more expensive of the two, has a one-size-fits-all service that adds features at no extra cost, he said. Reuters starts with a lower price but allows users to add options at additional cost.

"Geographically," Anderson said, the Thomson-Reuters deal "is an elegant fit."

Reuters employs more than 2,400 journalists in 131 countries. Though Thomson is out of the newspaper business, it owns Thomson Financial News in North America and AFX News, which has 13 bureaus in Europe. The proposed deal would include maintenance of the Reuters Trust Principles, which lay out editorial standards for the company's news stories, such as, "Reuters shall supply unbiased and reliable news services."

Roy Thomson, grandfather of current Chairman David Thomson, bought his first newspaper in Ontario in 1934. (David Kenneth Roy Thomson carries the title 3rd Baron Thomson of Fleet, a title in the British peerage created for his grandfather.)

By the 1950s, Roy Thomson owned the largest group of Canadian papers and had begun buying papers in Britain.

The company got into the oil business in 1971 and diversified into textbooks a few years later. It began its transformation into a market-data company with a 1985 acquisition and exited the North Sea oil industry in 1989. The company sold its North American community newspapers in 2000 and left the newspaper business in 2003 with the sale of its remaining interest in Toronto's Globe and Mail.

As a market-data and information company -- it also owns Westlaw, an online legal resource -- Thomson has sought to increase its market share. The purchase of Reuters would give Thomson 34 percent of the market-data pie, just ahead of Bloomberg's 33 percent.