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Reuters-Thomson: ‘A Good Fit’, Shareholder Support, Trading Concerns

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Reuters’ announcement this morning it has fielded preliminary takeover talks has got tongues wagging. A speculated £6-a-share offer would value the financial news and information company at £7.5 billion ($15 billion), with Thomson and News. Corp initially named as most likely suitors.

SEE ALSO: Reuters Courted For Takeover By Unidentified Bidder Thomson And News Corp. In The Frame

Thomson: As updated earlier, the Toronto Globe and Mail later ran unnamed sources from both companies as confirming Thomson is the interested buyer. Thomson itself is based in Toronto.

NWS-DJ: One of said same sources also said the approach was not merely a response to News Corp.‘s $5 billion offer for Dow Jones this week, saying it was “not an instant decision”.

Support :Reuters’ second-largest shareholder put its support behind a takeover. Hedge fund ValueAct Capital, which holds 6.5 percent in the company, said it would back a sale depending on the offer. Managing partner Jeffrey Ubben told Reuters itself the deal would make “a fabulous combination” - but he believes Reuters can be “an £8 stock in a few years” even if it is not sold.

No comment :Neither party commented officially today. However, AFP did manage to get Thomson public relations VP to say: “Thomson does not comment on rumors and speculation.”

Complementary: Analysts seem to like the idea. Denis Durand, a senior partner at Jarislowsky Fraser of Montreal, told AFP: “It would be possible and a good fit, but it’s always a question of price and how fast it can have an impact on earnings. One of the Globe and Mail’s sources also used the word “complementary”, adding the tie-up would be a “hand-in-glove opportunity”.

Stock :MarketWatch’s London bureau chief cries foul, suggesting insider trading before Reuters’ announcement to the market: “Obviously, the news had leaked into the market ahead of the trades, possibly illegally.” Reuters’ stock price closed up 25 percent at 615.75 in London.

May 4, 2007 11:32 AM ET

Posted In: Technologies / Formats, Broadband, Companies, Reuters

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