Thomson Reuters sells healthcare unit to Veritas
NEW YORK (Reuters) - Thomson Reuters Corp (TRI.TO) (TRI.N) said on Monday it is selling its Healthcare business to private equity firm Veritas Capital for $1.25 billion in cash.
The sale is part of the professional news and information provider's plan to shed non-core businesses to concentrate on faster growth areas like financial risk and compliance.
"We expect management will use the proceeds to invest or make acquisitions in growing segments of the business," UBS analyst Phillip Huang wrote in a note.
"This is consistent with CEO Jim Smith's playbook ... and we expect management will use this same strategy to try to accelerate growth in the Financial & Risk segment."
Thomson Reuters said last June that it intended to sell its Healthcare unit, which provides data, analytics and other services to improve efficiency to hospitals, government agencies and healthcare professionals. The sale was temporarily suspended in December due to challenging economic conditions, the company said at the time.
In 2010, Healthcare pulled in approximately $450 million in revenue with an operating margin of about 19 percent.
Thomson Reuters is trying to accelerate growth in the wake of the financial crisis, during which customers in banking and finance laid off tens of thousands of employees and cut costs.
The sale of the Healthcare unit, subject to regulatory approval, is expected to close in the next few months.
Veritas Capital has obtained debt financing commitments for the transaction, which is not subject to any financing condition.
Morgan Stanley (MS.N) and Allen & Company are acting as financial advisors to Thomson Reuters on the proposed divestiture. Covington & Burling LLP is acting as legal counsel.
Thomson Reuters' U.S. shares were down 1.5 percent at $28.45 on the New York Stock Exchange amid a broader market selloff. On the Toronto exchange shares were down 1.3 percent at C$28.27.