Reuters investors say bid is fair

BOSTON/NEW YORK (Reuters) - Some Reuters Group RTR.L RTRSY.O shareholders said on Tuesday the takeover price offered by Canadian publisher Thomson Corp. TOC.TO TOC.N was fair, although arbitrage traders noted the shares were pricing in a risk that a deal would not happen.

Thomson is offering 352-1/2 pence in cash and 0.16 Thomson share for each Reuters share to create the world's biggest financial news and data company.

That would value Reuters at 686 pence per share, or about 8.6 billion pounds ($17 billion), based on Tuesday's prices.

"The price mentioned in this morning's release seems fair," said Todd Bourell, a partner at hedge fund ValueAct, the second biggest shareholder in Reuters with a 6.6 percent stake.

"We're happy with the contemplated mix of cash and stock consideration," Bourell said.

With ValueAct signaling it likes the structure of the deal, it is more likely that it will be completed, analysts said.

Other investors including money management firms and hedge funds also said the price was reasonable.

"It's a generous offer compared to the Reuters share price before the offer and compared to Reuters fundamentals," said Jean Medecin, a London-based analyst for money manager T. Rowe Price, which holds Reuters shares.

Some investors said last week that a bid of 750 pence per share would be appealing.

Big shareholders Schroder Investment Management, Invesco Asset Management and Fidelity have declined to comment.

One arbitrage trader said the spread between the Reuters share price and the offer price was higher than usual, reflecting the risk the deal would not close or would be delayed by anti-trust issues.

Typically the spread on a deal expected to close in three to six months would be about 2 percent to 6 percent, he said.

The spread -- the difference between the value of the offer and the current share price -- was 8.84 percent at the close of trading in New York.

Another trader said the spread was high because the two companies did not yet have a definitive agreement.

Arbitrage traders aim to make money by taking positions in stocks that are targets of takeover bids.

Reuters shares, which rose to a five-year high of 659 pence in early trade on Tuesday, closed at 630 pence.

Shares in Toronto-based Thomson closed down 1.46 Canadian dollars at C$45.77, giving it a market value of about C$29.5 billion ($27 billion).

(Reporters and editors involved in writing and editing this report may own Reuters securities and are bound by the Reuters Code of Conduct, which restricts dealing in securities in companies a journalist is reporting on)

(Additional reporting by Muralikumar Anantharaman in Boston)