FT : Thomson Reuters On Track

Friday, October 26, 2007

Thomson Corporation and Reuters on Thursday expressed confidence in securing clearance for the Canadian group’s £9bn ($18.4bn) bid for its London rival without major concessions as each reported better third-quarter figures than expected.  Regulators have sent questionnaires to customers and competitors of the two groups, focusing on possible concerns over their provision of real-time market data, earnings estimates, historical data, information on deals and news.  Some small competitors are understood to have raised questions about access to Reuters Instrument Codes – used to identify securities on its terminals – and whether other vendors would retain access to Thomson’s AFX newswire, but analysts said neither issue appeared to be a dealbreaker.  “There are grumbles, but nothing really substantial,” said David Anderson, editor of Inside Market Data Reference.  Dick Harrington, chief executive of Thomson, described its discussions with regulators as productive.  Tom Glocer, the Reuters chief executive who will lead the combined group, said it was “making good progress with integration planning” and remained on course for regulatory clearance in the first quarter of 2008.

Reuters reported underlying revenue growth of 7.6%, or a 2.3% increase, to £646m for the quarter once the weak dollar was taken into account, in spite of turbulent markets.  In some areas, notably foreign exchange, it was helped by the volatility, reporting 30% underlying growth in usage revenues.  Mr Glocer said the growth reflected Reuters’ Core Plus strategy of positioning the group better for the era of electronic trading…..Even in Reuters’ research and asset management divisions, where the overlap with Thomson Financial is greatest, customers were showing no signs of delaying orders until the deal completed, he added.  Thomson reported 6% organic revenue growth for a total 11% increase in third-quarter sales to $1.8bn, as it set out plans to expand its TradeWeb electronic trading platform in partnership with dealers.  The Thomson Financial division, which will combine with Reuters, reported 5% organic growth – below the 8% underlying growth at Thomson’s larger legal division – because of its slower-growing wealth management business.  Costs related to the Reuters acquisition and Thomson’s efficiency programme cut operating profits by 1% to $312m, but the $7.6bn sale of Thomson Learning boosted net earnings from $419m a year ago to $2.97bn.

Reference : http://www.ft.com/cms/s/0/42f8e35e-8326-11dc-b042-0000779fd2ac.html

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