Costs to be cut by $500 mil
LONDON — Reuters Group and Thomson Corp. said Tuesday they have agreed on terms for a merger to create one of the world’s largest financial news providers.
The cash and stock transaction values Reuters at $17.2 billion.
Holders of each Reuters share will be paid $6.99 in cash and 0.16 Thomson-Reuters shares.
The value of the deal is calculated based on Thomson’s closing share price of 48.46 Canadian dollars ($44) on the Toronto Stock Exchange on May 3, the day before the companies announced they were exploring a combination.
Thomson, formally based in Toronto but with its operational head office in Stamford, Conn., would control about 70% of the shares in Thomson-Reuters. The combine will be headed by Tom Glocer, 47, now chief executive of Reuters.
The two companies expect to realize $500 million in savings by the third year.
Reuters trustees, who could have vetoed any takeover, endorsed the deal.
Reuters competes with Thomson and Bloomberg in providing data terminals to the world’s major banks and brokerages. Reuters was the market leader for years before steadily losing ground to Bloomberg.
According to an April report from Inside Market Data Reference, Bloomberg has a 33% share of the market, with Reuters holding 23% and Thomson 11%.
U.S.-traded shares of Thomson rose 16¢ to $42.16 Tuesday, while Reuters’ U.S. shares jumped $2.72, or 3.8%, to $74.34.
The merged companies will have a dual-listed structure.
Thomson will change its name to Thomson-Reuters Corp. and retain current listings on the Toronto Stock Exchange and the New York Stock Exchange.
Thomson-Reuters will apply for its ordinary shares to be listed on the London Stock Exchange and intends to apply for its American Depositary Shares to be listed on Nasdaq.
“The companies will be separate legal entities but will be managed and operated as if they were a single economic enterprise,” the announcement said. “The boards of the two companies will be identical, and the combined business will be managed by a single senior executive management team.”
The combined Thomson Financial unit and Reuters financial and media businesses will be called Reuters.
Thomson’s professional businesses — legal, tax and accounting, scientific and health care — will be branded as Thomson-Reuters Professional.
Woodbridge, the Thomson family holding company that controls roughly 70% of Thomson, will own approximately 53% of the combined business. Other Thomson shareholders will have 23% and Reuters shareholders 24%, the companies said.