FT : Geoff Beattie Architect Of Thomson Reuters Deal

Tuesday, April 22, 2008

…..More unusual than the fact that a member of the FTSE 100 and S&P 500 will have a 53% family shareholder is the way the Canadian clan exercises its stewardship.  The architect of Thomson Corp’s pursuit of Reuters was not David Thomson, the chairman and grandson of the founder, nor Dick Harrington, chief executive, but Geoff Beattie.  As president of Woodbridge, the family investment company, Mr Beattie, 48, is often described as the consigliere or éminence grise of the family.  It is a sign of the rarity of such roles in Anglo-Saxon capitalism that there seems to be no English equivalent.  Mr Beattie, deputy chairman of Thomson Reuters, describes the role simply: “Woodbridge exists for one reason – to create value for its shareholders, who are all descendants of Roy Thomson.”  In the 30 years to 2005, he says, that value grew from $300m to $30bn.  The structure emerged as the founder expanded the family’s assets from a single Ontario newspaper to include the Sunday Times in London, Thomson Travel and North Sea oil interests.  Woodbridge was conceived as an investment company that would sit above those concerns, but it plays a hands-on role in strategy, governance and use of capital.  Other family conglomerates accrue advisers who “slowly but surely emasculate the family”, Mr Beattie says.  But Woodbridge acts as the sole conduit between the family, its assets and a tight circle of loyal lawyers and bankers.  In 50 years only two people have held the role.  Mr Beattie took over in 1998 from John Tory, a lawyer who spent 20 years advising Roy Thomson and another 20 counselling his son, Kenneth.  According to Mr Beattie, who began his career in Torys law firm, continuity has shaped a long-term approach that has become a family hallmark.  Without the responsibilities of operating executives, “it allows us the time, and gives us the responsibility, to be far-sighted”.  Others cite this detachment as the reason Thomson family members have been unsentimental traders of assets.  The Reuters transaction was largely funded by the sale of Thomson Learning, for at least $2bn more than had been expected.  Ken Thomson’s sales in 1981 of the London newspapers that earned his father the title Lord Thomson of Fleet cemented the family reputation for having an uncanny sense of when an industry is on the turn.  The approach has driven huge churn in the portfolio, but with the Reuters acquisition Woodbridge has placed most of the family’s chips on “intelligent information” – data of vital importance to traders, lawyers, tax accountants, scientists and medics.  Its Thomson Reuters holding is the largest of Woodbridge’s assets, but its 50-strong office also oversees technology-focused private equity investments and smaller holdings such as 40% of CTVglobemedia, publisher of Canada’s Globe and Mail newspaper.


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Joachim Schwass, a professor at IMD, the Swiss business school, who specialises in family business and entrepreneurship, says the Thomson family is atypical in having begun to diversify in the first generation: “They had a very open mind, which is something unusual in family businesses.”  They also differ from others in not demanding a boardroom majority or preferential classes of shares.  Family representatives have just four of the 15 seats on the Thomson Reuters board.  “That’s by design.” Mr Beattie says.  “It’s a board meeting, not a shareholders’ meeting.”  Roger Martin, a board member of Thomson Corp and now Thomson Reuters, says: “They have always had the view that if you need to marshal the majority vote, something’s wrong.  There has been no situation I can recall in the seven or eight years I’ve been on the board that wasn’t unanimous.”  If Woodbridge sees a proposal may not win approval, it works to build consensus.  Woodbridge’s approach of continually “stress-testing” assets means, however, that it has frequently had to tell executives that businesses to which they are wedded no longer deserved a place in the portfolio.  Other boards would find it extraordinary for a shareholder to lead negotiations over a move as transforming as the bid for Reuters.  Mr Beattie says there were good reasons for him, rather than Mr Harrington, to conduct the discussions.  “Reuters wasn’t for sale, and they weren’t interested in suggesting to anyone they were,” he says.  Woodbridge could operate in “a very private environment”, whereas bringing in executives “who are out there competing with each other . . . creates a whole bunch of issues”.  The deal would not have happened had not Mr Beattie persuaded the guardians of Reuters.  Pehr Gyllenhammar, chairman of the Reuters Founders Share Company, says the company had “a real issue” at first with the notion of handing control to a single interest group.  Mr Beattie offered to adopt the Founders Share principles – editorial independence, integrity and journalistic freedom – for the combined Thomson Reuters, and volunteered concessions on selling shares that made any unwelcome change of control impossible.  That offer was “quite something”, says Mr Gyl-lenhammar. “It is very unusual that a family would not use their majority for short-term or medium-term capital gains.”  Mr Beattie’s role demonstrates the power the family has vested in him, says Professor Martin, who is dean of the Rotman school of management at the University of Toronto.  “I think they knew in their heart of hearts that they needed somebody like John [Tory] . . . They were smart and said, ‘We have to make it possible for them and enjoyable for them to do it.'”  According to Phillip Crawley, publisher of the Globe and Mail, the Woodbridge structure works in large part because of Mr Beattie.  “He’s got that ability, like his forebears, to see ahead, to pick where to be and where not to be.”  It is a model other businesses should study, Prof Martin says.  “There is a view, especially in the US, that the widely held, publicly traded corporation with no major shareholder is the natural order in the world.  It isn’t.  It is a recent phenomenon.”  The Thomson model’s time could have come, he says.  “I think there is going to be a pendulum swing back towards that, because of how hard it is to make the publicly held corporation work.”  If Prof Martin is right, Anglo-Saxon capitalism will need many more consiglieri.

Reference : http://www.ft.com/cms/s/0/76e37820-1005-11dd-8871-0000779fd2ac.html

2 Responses to “FT : Geoff Beattie Architect Of Thomson Reuters Deal”

  1. Sugiarto Setiabudi Says:

    In fact, the deal is the shophisticated business practice to effort in veiling all of the wrongdoing
    in Reuters Group PLC such as forgery,money laundering,concealment and any forms of unlawful conduct of BOD Reuters Group PLC .
    I think right now too difficult in seeking genuine journalism rather than customized news for commercial purpose.
    For example,Reuters always to make public blind with its constitution namely Reuters Trust principles that its founder share company comprised high profile person namely trustee.
    In fact ,Reuters trust principles is BULLSHIT,no more than deceptive devices. to cheat and to fool public

  2. Sugiarto Setiabudi Says:

    In referring ,hen Rupert Murdoch held more than 20 %
    He was be advised to dispose in order to comply with Reuters constitution.
    It is very clear,Reuters FounderShare Company has made systemic abuse ,inconsistent, and bias as well.
    Further more,the Reuters Founder Share Company Limited has made “FAKE TRUST PRINCIPLES”namely Thomson Reuters Trust Principles to induce public to believe something artificial as genuine.
    The Reuters Founder Share Company and Pehr Gyllenhammar as the chairman collectively,have failed to execute their safe guard duty and breached fiduciary duty as be mandated in the Reuters constitution.
    The deal,is no more to seek safe heaven place.
    In short,the failed trustees and its chairman Pehr Gyllenhammar should be hold liable in breaching their fiduciary duty along with to hurt Reuters journalism due to be have zero integrity,credibility and bias as well.
    Advisable, Pehr Gyllenhammar should step down as the trustee and chairman.


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