Thomson Reuters
Corp.
said Tuesday it will sell a major stake in its financial and risk business to a consortium led by private-equity giant
LP.
Under the partnership agreement, the Blackstone-led consortium will acquire a 55% stake in the financial and risk unit and Thomson Reuters will retain a 45% stake.
Thomson said the deal values the financial and risk business, the news and data company’s largest operation, at $20 billion. The unit, which services banks, money managers and other financial institutions, generated 2017 revenue of about $6 billion, the company said.
Thomson Reuters said it will receive $17 billion in proceeds at closing, funded by $14 billion of debt and equity to be incurred by the partnership and a $3 billion cash equity contribution by Blackstone. Canada Pension Plan Investment Board (CPPIB) and GIC are investing alongside Blackstone.
Thomson Reuters plans to use proceeds to invest in its core legal and tax & accounting units, pay down debt and repurchase shares, it said.
The new partnership will be managed by a 10-person board composed of five representatives from Blackstone and four from Thomson Reuters. The president and chief executive of the new partnership will serve as a nonvoting member of the board following the closing of the transaction.
“This deal strengthens F&R and should accelerate its growth and benefit its customers across the sell-side, buy-side and trading venues,”
Jim Smith,
president and chief executive officer of Thomson Reuters, said in prepared remarks. “Blackstone “will help F&R provide new and innovative products and services, drive further efficiencies and navigate ongoing industry consolidation.”
At the closing of the proposed deal, the financial and risk unit and Reuters News will sign a 30-year agreement for Reuters to supply news services to the new partnership for a minimum of $325 million a year.
Thomson’s financial and risk business has struggled to generate revenue growth over the years, hurt by cutbacks in spending by banks forced to contend with the fallout from the credit crisis. More recently it has been hurt by uncertainty among financial institutions in Europe over the adoption of new regulatory rules known as the Market in Financial Instruments Directive, or Mifid II. That uncertainty has curbed spending.
In November, Thomson Reuters, which is listed on the New York and Toronto stock exchanges, said third-quarter revenue increased by 2% from a year earlier to $2.79 billion. Organic revenue in the financial and risk business was essentially flat and fell below expectations, the company said at the time.
Blackstone is one of the world’s largest private-equity firms, with about $387 billion of assets under management as of September.
Thomson Reuters, which is controlled by Canada’s Thomson family, is also a major provider of data and software tools used by legal and tax professions, and owns the Reuters news service.
Bolstered by the financial muscle by Blackstone, Thomson Reuters could more easily manage the volatility in the financial and risk business while gaining access to a new source of investment. Thomson Reuters competes with Bloomberg LP and Dow Jones & Co., owner of The Wall Street Journal, to sell data and analytical tools to traders of stocks and other securities.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
