For the last several weeks, there have been rumors of a suitor pursuing Reuters (www.reuters.com), with The Thomson Corp. (www.thomson.com) mentioned as the most likely. Now, the companies have confirmed that The Thomson Corp. has wooed and won Reuters Group plc with a $17.2 billion takeover bid. It seems that Thomson has been working toward this transaction for the last 2 years. Its just announced sale of the Thomson Learning division will provide some welcome and well-timed funding for the acquisition (see the other NewsBreak this week: http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=36230). The deal will serve to consolidate two of the three major providers of financial data, news, and trading systems to the financial services industry, and will position the new Thomson-Reuters just ahead of arch-rival Bloomberg. The combined company will generate sales of more that $11 billion a year and expects to cut costs more than $500 million over three years. The deal is subject to both U.S. and European Union regulatory considerations and has already stirred up some opposition from unions....
The Implications (Complications)
One industry player could be significantly impacted by this merger. Dow Jones, which has received an unsolicited bid from Rupert Murdoch’s News Corp. (that has thus far been rejected by the Bancroft family that holds majority control of DJ), distributes its news to the financial services market through Reuters and Thomson. Dow Jones Newswires also competes directly with Thomson, Reuters, and Bloomberg.
In the corporate and media markets, Dow Jones partners with Thomson and Reuters to distribute their content to Factiva customers.
When Dow Jones acquired the remaining interest in Factiva from Reuters last year (http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=18468), the deal specified that Reuters’ content would continue to be available through Factiva “until at least mid-2010.” In connection with the transactions, Reuters agreed not to compete with Factiva’s core business for a 2-year period and to continue the “exclusivity arrangements currently in place for certain Reuters’ content provided to Factiva.” Dow Jones representatives would not agree to my request for an interview but did supply this statement via email: “Dow Jones and Reuters have strong and long term relationship partnerships, including the distribution of Dow Jones Newswires and Factiva content to mutual clients via the Reuters platform. We expect to continue to serve our mutual customers together well into the future. However, we cannot discuss the terms of the agreement.”
According to a report in the Wall Street Journal, the board members of Dow Jones “have expressed concern that Dow Jones could be at a disadvantage to those larger rivals, especially in light of the Thomson-Reuters merger. Mr. Murdoch is arguing that News Corp. would help Dow Jones’s strategic position with its deep pockets and global reach.”
The bottom line question about the Thomson-Reuters merger—indeed, any corporate merger—has to be, what are the potential impacts on customers? Clearly, customers in the financial markets would have a more limited choice of providers.
Concerning customers in the professional services market, Marydee Ojala, editor of ONLINE and a long-time information industry observer, commented in her blog: “The rest of Thomson (the part with tax, scientific, legal, and healthcare that sells Dialog, DataStar, Westlaw, Web of Science, and other databased products to librarians) will become Thomson Reuters Professional. With luck, and I mean a lot of luck, the products vital to information professionals will be resuscitated and not allowed to wither on the vine, as some have been doing over the past few years. I wish I were more optimistic that this would happen. ‘Our’ products are such a small piece of the overall product mix that we are the really small potatoes in this deal. We need to make sure we’re not the potatoes smashed in this merger process.”
Wednesday, May 23, 2007
Information Today | Thomson and Reuters confirm their deal