Financial news publisher Dow Jones & Co. said Wednesday it will buy out Reuters Group PLC’s 50 per cent stake in news database Factiva for $160 million.
Dow Jones, which publishes the Wall Street Journal, said it will pay about $153 million in cash and $7 million in preferred stock issued by Factiva, subject to a working capital adjustment. The cash portion will be funded with proceeds from the sale of up to six of Dow Jones’ Ottaway newspapers.
Dow Jones said it also will make annual payments over the next three and a half years under a variety of agreements with an estimated value of about $25 million.
Founded in 1999 as a 50-50 joint venture between Dow Jones and Reuters, Factiva provides business content, research products and services. New York-based Factiva has 1.6 million paying subscribers and about 750 employees across 33 locations worldwide.
“Together with the previously announced sale of up to six of our community newspapers, this reflects our determination to reduce our reliance on print publishing and to deploy our capital to the highest-returning investments for our shareholders as opportunities arise,” Dow Jones chief executive Rich Zannino said in a statement.
Dow Jones said the Factiva and Ottaway transactions will reduce its reliance on print revenues to about 60 per cent in 2007 from around 70 per cent of revenue in this year.
The company said it will integrate Factiva into its Dow Jones Enterprise Media Group, which will result in costs that will lower full-year 2006 earnings by about three cents a share. In 2007, the deal is expected to boost earnings by three to five cents a share after about two cents of additional integration costs.
The acquisition is expected to close by the end of the year, subject to antitrust approvals and customary closing conditions.