Thomson Reuters bid reported

May 05, 2007|By Thomas S. Mulligan | Thomas S. Mulligan,Los Angeles Times

NEW YORK -- Perhaps content is king after all - at least if it's financial news content.

Canadian-owned Thomson Corp. launched a buyout bid yesterday worth at least $16 billion for Reuters Group PLC, a move that would combine two financial-information providers to better compete with Bloomberg LP and Dow Jones & Co.

Word of the offer by Stamford, Conn.-based Thomson followed Tuesday's news that Rupert Murdoch's News Corp. had made an unsolicited $5 billion bid for Dow Jones, parent of The Wall Street Journal, a stunning 65 percent premium above the company's previous stock-market valuation.

Dow Jones' controlling Bancroft family rebuffed Murdoch's bid, but Reuters, which has even more ironclad anti-takeover protection than Dow Jones, was leaning in favor of the Thomson deal, according to the Financial Times.

Reuters issued a statement acknowledging "a preliminary approach from a third party."

Thomson declined to confirm that it was the bidder, but the company was identified in numerous reports citing people familiar with the situation.

Shares of London-based Reuters, traded as American Depository Receipts on the New York Stock Exchange, soared $15.84, or 27 percent, to close at $74.76 - the highest level since 2001.

Thomson shares closed at $43.45, down 28 cents.

The News Corp. offer prompted speculation that a publisher such as New York Times Co. or Washington Post Co. might enter the fray as a "white knight" to protect The Journal from Murdoch's tabloid sensibility and inclination to meddle editorially to advance his political agenda.

Even Thomson was mentioned as a potential bidder, although such a move would be an about-face for a company that has transformed itself in the last seven years by selling its more than 200 U.S. and Canadian newspapers - including Toronto's Globe and Mail - and becoming an almost exclusively electronic provider of specialized information for the legal, financial, accounting, scientific and health fields.

As such, most of its money comes from subscriptions rather than advertising. Thomson is in the process of selling its distance-education division for $5 billion, which could help finance a Reuters acquisition.

Bloomberg, Reuters and Thomson - in that order - are the leaders in supplying Wall Street traders and investment bankers with desktop screens that allow them to crunch data on markets and corporations. But a Dow Jones backed by News Corp.'s global reach and financial muscle also could make a competitive impact in that lucrative niche. Murdoch has said that financial news is the fastest-growing segment of that industry.

Just as Dow Jones' relatively anemic earnings keep it from realizing the global expansion that Murdoch envisions, "Reuters has a top-shelf service, but it doesn't have the financial wherewithal to take itself to the next level," said media investor Harold L. Vogel of Vogel Capital Management in New York.

Thomas S. Mulligan writes for the Los Angeles Times.

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