Blackstone to buy controlling stake in Thomson Reuters Financial and Risk business in a $17.3 Bn deal

Blackstone to buy controlling stake in Thomson Reuters Financial and Risk business in a $17.3 Bn deal

Blackstone – a multinational private equity, alternative asset management, and financial services firm – agreed to acquire 55% stake in Thomson Reuters financial terminals and data business, making it a direct competitor to Bloomberg. The deal values the unit at about $20 Bn, including debt, which would be carved-out into a new company, with Thomson Reuters owning the remaining 45%.

This would be the largest deal for Blackstone since the financial crisis. The US fund manager operates through four segments: Private Equity, Real Estate, Hedge Fund Solutions, and Credit.

Thomson Reuters, formed in 2008 through the acquisition of London-based Reuters by Canada’s Thomson, is a provider of news and information for professional markets. The Company is organized into three business units: Financial & Risk, Legal and Tax & Accounting. The Financial & Risk (F&R) segment is a provider of critical news, information, and analytics, enabling transactions and connecting communities of trading, investment, financial and corporate professionals. Financial & Risk also provides regulatory and operational risk management solutions. The Company’s brands and products categories include Thomson Reuters Eikon, Thomson ONE, FX Trading Solutions, Tradeweb, Thomson Reuters Enterprise Platform, among others.

The private equity firm plans to improve all segments of the F&R business, including the Eikon platform, its flagship desktop product. Thomson Reuters’ executives believe the F&R division is well positioned within the Company, but it could be stronger with Blackstone as a partner. According to Blackstone Group’s president Tony James, the future of Thomson Reuters’ F&R unit is in selling data, rather than selling terminal desktop products to a shrinking customer base of fund managers, traders, bankers, and investors, thereby competing with Bloomberg and FactSet. The deal would put the company in a direct competition with Bloomberg LP in providing news, data and information to the financial industry.

The acquiror will be Blackstone’s private equity unit, which is in the process of deploying an $18 billion fund. To pay for the deal, Blackstone is partnering with Canada Pension Plan Investment Board and Singapore state fund GIC – two of the biggest global institutional investors. Collectively, they would contribute $3 Bn in cash and $14.3 of new debt will be raised. The proceeds will be used to repay existing debt buy back stock and pursue growth: organically and through M&A. The buy-out is expected to close in the second half of 2018.

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