Thomson/Reuters Merger Would Face Shareholder Obstacle

Thomson Financial is in talks with Reuters regarding a takeover, valued at more than $15 billion and possibly topping $16b. Rumors of a deal, later acknowledged by Reuters as a "preliminary approach from a third party", hit newswires on Friday and sent Reuters shares soaring to a multi-year high. One potential obstacle for Thomson is Reuters' so-called "Founders Share", the right held by private Reuters Founders Share Co. to prevent any takeover. Thomson and Reuters would be a complementary fit, as Thomson is strong in U.S. data products, while Reuters is best known for its Europe and Asia region data. Data from Inside Market Data Reference shows Bloomberg controlled 33% of the global financial data and news market in 2006, followed by Reuters at 23% and Thomson at 11%. Some data clients are voicing concerns about a duopoly in the market data industry. ADRs of Reuters gained 27% to $74.76 on Friday, trading as high as $81.03 intra-day, reaching their highest levels since '01. Shares of Thomson fell 0.6% to $43.45.

Sources: FT.com, MarketWatch, The Wall Street Journal
Commentary: Reuters Merger Speculation: Thomson, News Corp Possible Suitors • Reuters Buyout By Thompson Underscores Changes in Media Landscape • Reuters Shares Fly on Takeout Approach
Stocks/ETFs to watch: Reuters Group plc (RTRSY), Thomson Corp. (TOC). Competitors: FactSet Research Systems (FDS), Dow Jones & Company Inc. (DJ), The New York Times Co. (NYT), News Corp. (NWS)

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