Blackstone in talks to buy majority stake in key Thomson Reuters unit

US private equity firm Blackstone is in advanced talks to buy an approximate 55 per cent stake in the Financial and Risk business of Thomson Reuters , a deal that would value the unit at about $20 billion including debt, three sources familiar with the matter said on Monday.

Thomson Reuters’ board, the sources said, is expected to meet on Tuesday to discuss Blackstone’s offer for the F&R business, which supplies news, data and analytics to banks and investment houses around the world. The unit contributes more than half of Thomson Reuters’ annual revenues.

Under the terms of the Blackstone offer, Thomson Reuters would retain a 45 per cent stake in the F&R business as part of a partnership with the US buyout firm, according to the sources. Thomson Reuters would receive more than $17 billion for the deal, including about $4 billion in cash from Blackstone and about $13 billion financed by new debt taken on by the new F&R partnership, two of the sources said. The whole F&R business is valued at about $20 billion, consisting of about $7 billion in equity and $13 billion in debt, they said.

Statement

Thomson Reuters said in a statement late on Monday that “it is in advanced discussions with Blackstone regarding a potential partnership in its F&R business.” The company gave no more details.

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A spokeswoman for Blackstone declined to comment. If the board agrees to a deal with Blackstone, it would represent the biggest shake-up of Thomson Reuters since it was formed a decade ago by Thomson Corp’s acquisition of Reuters Group Plc. Canada’s Thomson bought London-based Reuters for £8.7 billion in 2008, worth $17 billion at the exchange rate at the time. Reuters was unable to determine who would lead the new division.

Thomson Reuters would hold on to its international news service, Reuters, along with its Legal and Tax and Accounting divisions. Reuters is expected to continue to supply news to F&R’s flagship desktop product, Eikon, as well as to other products, though the details of the arrangement could not be determined. The sources cautioned that a deal had not been finalised and could still fall apart. They declined to be identified because the negotiations are confidential.

It is unclear how the proposed deal would be viewed by trustees of the Thomson Reuters Founders Share Co, which was set up to oversee Reuters’ editorial independence when the company was first publicly listed in the 1980s. The trustees approved Thomson’s deal for Reuters a decade ago. Thomson Reuters Founders Share Co chairman Kim Williams did not respond to requests for comment.

Blackstone’s investment, if finalised, will put the buyout firm in direct competition with Bloomberg LP as well as News Corp’s Dow Jones division in selling data services, analytical and trading tools to Wall Street. – Reuters