Thomson in talks to buy Reuters for $17.6 bln

By Mark Potter

LONDON (Reuters) - Canada's Thomson Corp TOC.TO is in talks to buy Reuters Group Plc RTR.L for about 8.8 billion pounds ($17.6 billion) to create the world's biggest news and financial data company, the two firms said on Tuesday.

Under the terms of the proposed deal -- which would see Reuters CEO Tom Glocer become chief executive of the combined entity -- Reuters investors would get 352-1/2 pence in cash and 0.16 Thomson stock for each share, worth 697 pence a share at Monday's closing prices, they said in a joint statement.

That would be 42 percent above Reuters closing share price on Thursday, the day before it announced a bid approach. The deal value is based on the number of outstanding Reuters shares.

Reuters shares leapt around 7 percent to a 5-year high of 659 pence in early trade.

A tie-up will create a company with about 34 percent of the global market for "market data," just ahead of privately-owned rival Bloomberg on 33 percent, according to Inside Market Data.

It also comes amid a frenzy of dealmaking in the media sector as the survivors of the economic downturn that followed the bursting of the dot.com bubble look to extend their reach.

Last week Rupert Murdoch's News Corp NWSa.N made a $5 billion bid for Wall Street Journal owner Dow Jones & Co Inc. DJ.N, which was rebuffed by Dow Jones' controlling investors.

"Although a rival bid cannot be ruled out, given the scale of synergies on offer (and therefore healthy premium offered) ... we view Thomson as the bidder best placed to secure Reuters," Numis Securities analysts wrote in a research note.

Thomson TOC.N and Reuters RTSY.O said they expected to make over $500 million of annual synergies within three years of completion of a deal.

The enlarged, dual-listed group will be called Thomson-Reuters and the combined Thomson Financial unit and Reuters financial and media businesses will be called Reuters.

The combined group will also adopt the Reuters trust principles aimed at safeguarding the independence of Reuters news, the joint statement said. The Reuters Founders Share Co, run by 15 trustees, has a "golden share" capable of blocking a takeover of the company.

"It should be emphasized that discussions are at a stage where there can be no assurance that agreement will be reached. No transaction will be announced without the support of the Reuters Founders Share Company," the joint statement said.

THOMSON REUTERS

Woodbridge, the Thomson family holding company that will own about 53 percent of the combined company, will vote in favor of the deal, the joint statement said.

Other Thomson shareholders will own 23 percent of the combined business and Reuters shareholders will own 24 percent. The deal is subject to approval by both Thomson and Reuters shareholders.