KEY POINTS:
Tom Glocer, the chief executive of Reuters, is confident that the company's sale to Canadian rival Thomson will be cleared by regulators in the US and Europe over the coming months after the two media giants agreed to a £8.7 billion ($23.4 billion) deal.
Analysts have argued that
regulatory scrutiny of the deal is inevitable as it creates the world's largest financial information provider.
The combined company will have a global market share of 34 per cent compared with Bloomberg's 33 per cent. The scope of any regulatory inquiry will also be determined by the reaction to the deal among customers of the two companies.
The deal was agreed on after the Reuters Founders Share Company, which has the power to block any deal, backed the acquisition.
Woodbridge, the largest shareholder in Thomson, agreed to use its 53 per cent controlling stake in the combined company to ensure the Reuters Trust principles were adhered to.
Glocer, who will be chief executive of the enlarged Thomson Reuters business, said it would take months to gain regulatory approval. He said the response from customers had been "overwhelming" and positive. "They want us to succeed."
Dick Harrington, the retiring chief executive of Thomson, said: "The dynamics of the industry are changing dramatically." The company would argue that there was "rigorous" competition at the top end with Bloomberg and that a raft of companies had emerged to compete with Reuters.
Reuters provides real-time information to trading rooms while Thomson is much stronger in the investment banking sector. In terms of products, Reuters dominates in foreign exchange while Thomson is stronger in fixed-income, an area where Reuters has historically trailed Bloomberg.
Sam Hart, an analyst with Charles Stanley, said there could be small forced disposals in niche areas but regulatory issues were "unlikely to be a deal breaker".
Glocer stands to make £27 million as a result of the sale and has agreed to reinvest a "significant" chunk of that profit in shares in the new company. Reuters chairman Niall Fitzgerald said there was "nothing disproportionate" in Glocer's payment which represents "one-third of 1 per cent of the value that has appreciated for shareholders since those stock options were granted".
In a letter to Reuters staff, Glocer said there would be job cuts but both companies argued there was potential for significant job creation as new services and products were created.
- INDEPENDENT
