Thomson’s pursuit of Reuters, the financial news and data group, was given a boost as the Canadian company sold its Thomson Learning division for a better-than-expected $7.75 billion (£3.9 billion) cash.

The proceeds from the sale, to the British-based private equity group Apax Partners and OMERS Capital Partners, an Ontario pension fund, would cover the lion’s share of the £4.4 billion cash portion of Thomson’s cash-and-shares indicative offer for Reuters that values the British business at about £8.8 billion.

A source close to Thomson said that its offer for Reuters was fully funded when talks between the two were revealed in a joint statement on Tuesday, but added that the sale of the educational publishing business “was not unrelated”.

A Reuters insider added that the sale had “greatly strengthened Thomson’s financial freedom of movement”, adding that the private equity sale “clearly signals they have the financial muscle to see this through”.

Background

• Hedge fund takes stake in Reuters

• Reuters chief to receive £27m after takeover

• Thomson and Reuters agree £8.7bn takeover

• Thomson cashes in on learning division

• Bid likely to cap Reuters at £8.8bn

Has Reuters chosen the right way?

The deal with Thomson marks a shift away from Reuters' roots in journalism and into a future of financial analytics

Related Internet Links

• Reuters company information

• Reuters share price chart

• Reuters forecast

Reuters shares closed 11½p higher at 613p on news of the Thomson Learning disposal, still standing at a heavy discount to Thomson’s indicative offer of about 732½p a share. Shares in Thomson were up C$2.11, or nearly 5 per cent, in Toronto, to C$47.11.

The City has been lukewarm towards Thomson’s tilt at Reuters, largely on regulatory concerns, but analysts suggested that the “incredible price” achieved for the Learning division, which had been expected to fetch up to $6 billion, could see Thomson sweeten its bid.

Paul Gooden, of ABN Amro, said: “The fact they’ve sold it for a much higher-than-expected price can only be good news [for Reuters].”

The disposal was the latest move in the company’s decade-long strategic reshaping, led by Richard Harrington, the chief executive. He hopes that the process will culminate in the creation of Thomson-Reuters, a financial news and data group that would match Bloomberg’s leading 34 per cent share of the market.

Mr Harrington intends to step down from the newly created company if the takeover is successful, to be succeeded by Tom Glocer, the Reuters chief executive, who would lead the combined group.

Sources close to the ongoing talks between Reuters and Thomson said that the various regulatory issues that the possible deal has raised are still under discussion. “They are an obstacle, but are not insurmountable,” one source said.

Reuters has insisted that it would not agree a deal without the backing of the 18-member Founders Share Company. It is designed to ensure that the British group “does not fall into the hands of any one interest”. A successful deal could also trigger a European Commission inquiry that could last six months.

Included in the sale of Learning are Thomson’s higher education, careers and library reference assets. They include the Wadsworth, Delmar Learning, Gale, Heinle, Brooks/Cole and SouthWestern brands. Nelson Canada, the Canadian educational publisher, will also be spun off to be majority-owned by OMERS.

The deal is expected to close in the autumn and is subject to shareholder approval.

Meanwhile, Fitch, the credit ratings agency, said that the proposed Thomson-Reuters deal would improve both companies’ business profiles by creating the largest information services provider.

Big numbers

£8.8bn
value of Thomson’s indicative cash-and-shares bid for Reuters

£4.4bn
Portion of that price that Thomson has offered to pay in cash

$7.75bn
The amount of cash raised from yesterday’s sale of Thomson Learning

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