Thomson Reuters’ board is expected to meet today to discuss Blackstone Group’s offer of over $16 billion for a 55% stake in the company’s financial and risk business – a move that would take the business into the private sector, allow for a restructure out of the public eye, and create a standalone financial data and analytics joint venture. The company’s non-financial businesses, essentially Reuters news service, and legal and tax and accounting divisions, would most likely remain in the public company, although their future is unclear.
Thomson Reuters stated yesterday that it is in ‘advanced discussions’ with Blackstone, although it pointed out that the discussion may or may not lead to a definitive agreement. The company’s president and chief executive, Jim Smith, is also reported to have written to staff yesterday saying the progress the company has made in turning around the financial and risk business and its potential are reflected by Blackstone’s interest.
An acquisition of a majority of Thomson Reuters’ largest revenue generating business – financial and risk reported revenue of over $6 billion in 2016 – would be the biggest shake-up of the company since it was created in 2008 when Canada’s Thomson Corp acquired the UK Reuters Group. The deal may, however, rest on the trustees of the Thomson Reuters Founders Share Company that was set up to oversee Reuters’ editorial independence when the company went public and holds a ‘golden’ share that could be a barrier to potential divestment.
If the Blackstone deal goes ahead, the joint venture resulting from the acquisition would take charge of Thomson Reuters assets including the Eikon terminal and Messenger service, Elektron data platform, FXall electronic trading platform, Datastream time series database, and the recently acquired REDI execution management system.
From the risk business, the joint venture would gain Thomson Reuters solutions covering Markets in Financial Instruments Directive II (MiFID II), Know Your Customer (KYC), anti-money laundering and compliance management. These include World-Check risk intelligence, the recently released Connected Risk platform, Regulatory Intelligence, Enhanced Due Diligence, and recently acquired KYC as a Service.
The ramifications of a sale of a 55% stake of the financial and risk business for Thomson Reuters’ clients are impossible to assess at this stage, but completion of the deal could raise questions about the future of Thomson Reuters’ products and services, and open the market to other fintech and regtech competitors.
