Reuters 'is not for sale'
Friday 2 August 2019
Before the ink is dry on the Refinitiv deal, Thomson Reuters is already planning to sell its impending stake in the London Stock Exchange but Reuters remains off limits: it is not for sale.
The Canadian group’s chief executive James Smith (photo), declined to comment on whether potential buyers had expressed interest in the news agency, founded in 1851 and acquired with the rest of the Reuters business for $17 billion on the eve of the 2008 financial crisis.
“Everybody talks to everybody about everything, but news is not for sale,” he told the Financial Times.
The CEO said Thomson Reuters plans to sell down its stake in the LSE within five years. Thomson Reuters will own 15 per cent of the London-based group. It will be acquired through LSE’s $27 billion purchase of Refinitiv, formerly Thomson Reuters financial and risk division, in which the Toronto-based group holds a 45 per cent interest.
The transaction leaves Thomson Reuters with three core businesses - legal, corporate, and tax and accounting - plus the news agency.
The LSE transaction will permit Thomson Reuters to sell the first third of its stake two years after it closes - expected in the second half of next year - and the entire holding after four years.
Speaking after Thomson Reuters announced its Q2 results, Smith told the FT: “Five years from now, obviously, we would prefer to have those resources invested behind our core businesses, where we think there is a great opportunity to continue to create value.”
The LSE will take on Refinitiv’s commitment to pay at least $325 million a year until 2048 for the supply of Reuters news.
The FT said the deal has heightened media industry speculation about whether the slow-growing, low-margin financial news provider still belongs in a company that now treats financial data terminals as a non-core investment.
“You now have Reuters [News] sitting over with a tax and accounting and legal business that never figured out what it could do with it. Why not have the LSE buy that too?” It quoted one industry executive saying.
The FT said Smith defended the arrangement, saying Michael Friedenberg, appointed last November as president of Reuters News, “has come up with a strategy for how we can increase the growth rate there, and we’re committed to supporting him in executing that strategy.”
Smith said he intended to remain as chief executive until he was able to invest some of the proceeds of the LSE transaction. Stephane Bello, chief financial officer, “tells me there’s still more money in the cheque book, so I’d like to stick around to spend it,” he said. ■
- Financial Times