Representatives of both Thomson (NYSE: TOC) and Reuters confirmed their partnership at a Tuesday morning conference in London, marking what Thomson CEO Richard Harrington said “is a milestone in the of Thomson and Reuters that will unleash the untapped potential in both companies”.
The combined company will take Reuters’ Tom Glocer as CEO, Thomson chairman and founding family member David Thomson as chairman, and both Reuters chair Niall FitzGerald and Geoff Woodbridge, president of Thomson’s Woodbridge holding company, as deputy chairmen. The new entity will opt for a dual listing that will allow the existing companies to remain separately listed in Toronto, London and New York. Thomson shareholders will hold 76 percent of the new group, Reuters’ 24 percent.
- Motivations: Glocer: “It’s all about the shift to electronic delivery of information, the effects of global delivery, the need to be 24/7 around the world. The shape of the financial services market has been changing, that has been foremost in our mind at Reuters when we thought ‘what kind of change and capabilities do we need?’. It’s going to be our ability to bring new and innovative products to market, to extend the geographical reach of some of the exciting products that Thomson has. This is just a simple desire to be the very best, number one in each market we choose to address.” David Thomson: “It’s an opportunity on a grand scale … It’s about redefining spaces and making things really quite special. If my grandfather [Ken Thomson] were here, he’d be ecstatic.” Harrington: “This is the logical next step for the Thomson corporation – the high point of what we’ve been working for for the last decade. Thomson was one of the first to recognize that information was moving from print to digital and then to electronic services.”
- Standards: FitzGerald said the Reuters Founders Share Company has “announced that they fully supported this transaction, had they not agreed the transaction would not have proceeded”. “We have today the safeguards they represent reinforced in this transaction, [they] will apply to the whole of the Thomson-Reuters business, [they are] practies even more precise and sustainable than before we embarked on this”. Woodbridge’s Beattie: “[It is] a set of principles that is so well aligned to the way we want to manage all of the businesses we are interested in”, “having those principles in place, we would expect that to be the case for many years to come, the [Reuters] trust has an ally in the Woodbridge company”.
- Make-up: Thomson’s core product, financial information, will be the largest component of the combined group at 60 percent. Glocer: “We’ll be overwhelmingly electronic at 88 percent and will have a nice steady income stream from the subscription model.” The group wants to take advantage of Reuters’ footprint in Europe and Asia and of Thomson’s in the US. The combined geographic split is now Americas 60 percent ($6.9 billion), EMEA 31 percent ($3.5 billion) and Asia-Pacific nine percent ($1 billion).
- Regulatory: Glocer: “There are a lot of competitors. We think it’s overwhelmingly competitive. You now have a truly strong competitor to provide competition at the high end and, in addition, the industry itself is so remarkably changed over the last five years.” Several members of the new management team said the company would not need to dispose of any interests in order to satisfy any antitrust requirements.
- Synergies: There will be in excess of $500 million in synergies within 36 months, but Glocer said the pair are “unusually complementary”, “there’s less overlap than people think there is”, except in crisis management and business continuity plans, where the partner with the best set-up will win out. He tried to allay fears of reporter redundancies: “The value of news, which is often not fully appreciated in the Reuters story, is confirmed … for this combination. We intend to invest in news, both the journalists and all of us can look forward to an increase in the number of journalists we have. You don’t have to look much farther than what Rupert [Murdoch] is doing vis-a-vis Dow Jones (NYSE: NWS) to see that fast, breaking news is something people will pay for.” The pair will combine Reuters’ “primary research” (ie. original news reporting) with Thomson’s deep databases, especially in science and healthcare, to strengthen the information available.
Update: From the official documents (pdf): Thomson will change its name to Thomson-Reuters Corporation. Reuters will be known as Thomson-Reuters PLC. The combined Thomson Financial unit and Reuters financial and media businesses will be called Reuters (NSDQ: RTRSY). The existing Thomson professional businesses