Thomson-Reuters Corporation Merger

Thomson-Reuters Corporation is the name of a media company that will be created when The Thomson Corporation and Reuters merger.


Company structure

The chief executive officer of the merged company will be Tom Glocer, currently the chief executive of Reuters, and the chairman will be David Thomson, currently the chairman of Thomson.

The divisions of the company are as follows:

Thomson's news and financial information arm Thomson Financial will be effectively merged with Reuters into Thomson Reuters Markets, which will then trade under that name.

The remaining divisions of Thomson Corporation (Thomson Healthcare, Thomson Legal, Thomson Scientific, and Thomson Tax & Accounting) will operate as Thomson Reuters Professional.

Market position and antitrust review

The market of financial data provision then will be dominated by two companies, Thomson-Reuters with a (combined) market share of 34% and Bloomberg L.P. with a market share of 33%.

The transaction was reviewed by the U.S. Department of Justice and by the European Commission. On February 19, 2008, both the Department of Justice and the Commission cleared the transaction subject to minor divestments. The Department of Justice required the parties to sell copies of the data contained in the following products: Thomson's WorldScope, a global fundamentals product; Reuters Estimates, an earnings estimates product; and Reuters Aftermarket (Embargoed) Research Database, an analyst research distribution product. The proposed settlement further requires the licensing of related intellectual property, access to personnel, and transitional support to ensure that the buyer of each set of data can continue to update its database so as to continue to offer users a viable and competitive product. The European Commission imposed similar divestments: according to the Commission's press release, "the parties committed to divest the databases containing the content sets of such financial information products, together with relevant assets, personnel and customer base as appropriate to allow purchasers of the databases and assets to quickly establish themselves as a credible competitive force in the marketplace in competition with the merged entity, re-establishing the pre-merger rivalry in the respective fields."

These remedies are viewed as very minor given the scope of the transaction. According to the Financial Times, "the remedy proposed by the competition authorities will affect no more than $25m of the new Thomson Reuters group’s $13bn-plus combined revenues."

The transaction has also been cleared by the Canadian Competition Bureau.


Merger process

Historically, no-one single individual has been permitted to own more than 15% of Reuters, under the first of the Reuters Principles, which states that "Reuters shall at no time pass into the hands of any one interest, group or faction.". However, that restriction was waived for the purchase by Thomson, whose family holding company, The Woodbridge Company, will end up owning 53% of the enlarged business. Robert Peston, business editor at BBC News, stated that this has worried Reuters journalists, both because they are concerned that Reuters' journalism business will be marginalized by the financial data provision business of the merged company, and because of the threat to Reuters' reputation for unbiased journalism by the appearance of one majority shareholder. Pehr Gyllenhammar, chairman of the Reuters Founders Share Company, explained that the Reuters Trust's First Principle had been waived for the Thomson family because of the poor financial circumstances that Reuters had been in, stating that "The future of Reuters takes precedence over the principles. If Reuters were not strong enough to continue on its own, the principles would have no meaning.". He stated, not having met David Thomson but having discussed the matter with Geoff Beattie the president of Woodbridge, that the Thomson family had agreed to vote as directed by the Reuters Founders Share Company on any matter that the trustees deem to threaten the five principles of the Reuters Trust. Woodbridge will be allowed an exemption from the First Principle as long as it remains controlled by the Thomson family