Reuters and Thomson agree merger - Press Gazette

Reuters and Thomson agree merger

Canadian media giant Thomson today agreed to merge with rival Reuters for £8.7 billion after the deal was given backing by a body set up to protect Reuters' editorial independence.

The groups are set to join forces under the name Thomson-Reuters after the merger received the all-clear from the Reuters Founders Share Company, which controls a special share in the media group.

Thomson has agreed to pay 691p per share for Reuters in a deal which is set to create a "global leader" in financial news and information.

The merger will see Thomson own more than three-quarters of the newly merged business, with the Thomson family taking on a 53% stake in the firm.

Reuters will own the remaining 24% of combined group.

But the merger is subject to regulatory approval and there are concerns over competition issues, with the two firms effectively set to control around a third of the financial information market.

Reports emerged at the weekend suggesting that banks and fund managers were unsettled by the move, amid worries of growing consolidation among firms providing financial information to the City.

With newly named Thomson-Reuters estimated to hold around 34% of the market, rival Bloomberg is set to be left controlling around 33%.

Thomson said in the details of the deal that it had "undertaken to take whatever steps are required" to receive anti-trust clearance.

The newly enlarged business is due to be listed in the UK, Canada and the US if it gets the green light from regulators and will be headed by Reuters chief executive Tom Glocer.

Thomson president and chief executive Richard Harrington will retire when the deal goes through.

The two media firms are hoping to save more than 500 million US dollars (£252.4 million) in cost savings within three years by joining forces.

While the combined parent company will be named Thomson-Reuters, the merged business comprising Thomson Financial and Reuters' financial and media businesses will be called Reuters.

Thomson's professional operations, targeting the accounting and legal professions, will be known as Thomson-Reuters Professional.

The Canadian electronic publisher last week sold its education publishing division for a higher than expected 7.75 billion US dollars (£3.91 billion), which is believed to have given it a boost to finance the Reuters deal.

The new group confirmed it will retain the Reuters Founders Share Company structure.

Thomson's ability to gain the backing of the trust – made up of 15 independent executives headed by Swedish industrialist Pehr Gyllenhammer – was vital in the success of the deal, as it has a "golden share" which it can use to veto a buy-out of Reuters.

Thomson has pledged that the trust's principles will be maintained, including the independent process for appointing trustees.

Reuters chairman Niall FitzGerald said: "This is an historic day for Reuters and represents an important chapter in the development of our company and the commitment to our heritage.

"The shared expertise and complementary strengths of these two companies makes for a strategically compelling and financially attractive combination.

"I am especially proud that Reuters journalism will continue to be governed by the powerful Reuter Trust Principles of independence, integrity and freedom from bias."

Reuters was set up in 1851 by Paul Julius Reuter to transmit stock market quotations between London and Paris via the new Calais-Dover cable.

It now has 16,800 staff and a presence in 131 countries.

Thomson has about 32,000 staff in 37 countries, giving the combined group a workforce of more than 48,800.