Reuters and Thomson Financial have disclosed details about a possible deal for $17.6 billion dollars that would merge the two companies and create the world’s largest news and financial data company, Reuters reported today.
Under the deal, the new company would be a dual-listed group called Thomson-Reuters, and current Reuters CEO Tom Glocer would be the top executive at the new company. The bouyout would give Reuters shareholders approximately $7 in cash per share, as well as 0.16 of Thomson stock for each share (which is currently equivalent to about $14 a share).
The deal would give shareholders a 42% premium over the company’s closing value per share last Thursday, when news of the deal became public. Reuters shares rose to five-year highs yesterday in anticipation of the deal, but prices are still well below the proposed purchase price, as investors anticipate delays and scrutiny from regulators.
“We would expect close U.S. and EC (European Commission U.S.) regulatory scrutiny,” Credit Suisse analysts were quoted by Reuters as saying in a note.
The two companies said that they expected the combined company to save over $500 million annually through synergies within three years after completing the deal.
“Although a rival bid cannot be ruled out, given the scale of synergies on offer (and therefore healthy premium offered) … we view Thomson as the bidder best placed to secure Reuters,” Numis Securities analysts was quoted as saying in a research note.