Blackstone Group LP is in talks to buy a controlling stake in Thomson Reuters Corp.’s key business that provides data, analytics and trading platforms to Wall Street and financial professionals around the world.
Blackstone is in talks to buy about 55 percent of the business, according to a person familiar with the buyer. The unit, which doesn’t include the news gathering operations, has a valuation of about $20 billion, the person said, asking not to be identified because the financial details are confidential. The discussions are about a “potential partnership” in the financial and risk division, which had $6.1 billion in revenue in 2016, according to a statement late Monday from the Toronto, Canada-based Thomson Reuters.
A deal would thrust Blackstone into the $27 billion-a-year industry of financial market data and news, putting it in competition with Bloomberg LP and News Corp.’s Dow Jones division in selling services and trading tools to financial professionals from Wall Street to The City of London. A sale of the business would be one of the biggest restructurings of Thomson Reuters since Canada’s Thomson took over Reuters about a decade back.
Blackstone already owns the financial-technology firm Ipreo Holdings LLC, which it purchased together with Goldman Sachs Group Inc.’s merchant-banking arm for $975 million in 2014. Blackstone declined to comment.
Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news, data and information to the financial industry. Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.
Thomson Reuters’ Financial & Risk unit includes Eikon, its flagship terminal that provides data, analytics and trading platforms for financial industry professionals. The unit also sells regulatory and risk management solutions to customers. Seventy seven percent of the unit’s $6.1 billion revenue came from subscriptions to its products and 15 percent from transaction fees.
While subscribers can access news through the Eikon terminal, Thomson Reuters differentiates its news organization Reuters, which employs some 2,500 journalists, from its financial products business.
“As part of any proposed partnership, Thomson Reuters would retain a significant interest in the F&R business and would retain full ownership of its legal, tax & accounting and Reuters News businesses,” Thomson Reuters said in the statement.
Bloomberg had a 33.4 percent market share according to 2016 data, compared with 23.1 for Thomson Reuters, according to Burton-Taylor International Consulting LLC.
Thomson Reuters shares have retreated 9.6 percent from their all-time closing high of $48.06 in October, after third-quarter revenue missed analysts’ estimates. The company has a current market value of $30.8 billion. Chief Executive Officer James C. Smith attributed that shortfall to potential customers delaying decisions amid regulatory changes resulting from the European Union’s Markets in Financial Instruments Directive, or MiFID II.
In 2012, Thomson Reuters sold its healthcare unit, which provided data and analysis to hospitals, government agencies and employers, to Veritas Capital for $1.25 billion. In 2016, it offloaded its intellectual property and science division to Onex Corp. and Baring Private Equity Asia for $3.55 billion.
The division for sale makes up about half of the company’s profit. Any transaction deal would add to the $105 billion of private-equity deals targeting the media and technology industries over the past 12 months, according to data compiled by Bloomberg.
The board of Thomson Reuters is expected to meet Tuesday to discuss the deal, Reuters reported earlier.
Thomson Reuters is controlled by Woodbridge Co., an Ontario, Canada-based holding company that manages the assets of the Thomson family. According to a regulatory filing last month, Woodbridge holds 63.6 percent of Thomson Reuters shares. The Thomsons, descended from company founder Roy Thomson, remain some of the richest people in Canada.
— With assistance by Rachel Chang, Cathy Chan, Marcus Wright, Ben Scent, and Timothy Sifert