THOMSON Corp. and Reuters Group must sell copies of four databases within 60 days under a settlement with US, European and Canadian competition authorities that clears the way for their $16 billion merger.
Although the combined company will retain ownership of the databases, they must sell copies to approved buyers so that the acquirers can offer institutional financial data users products comparable to those offered by Thomson or Reuters prior to the merger.
The databases are Thomson’s WorldScope, a global corporate financial fundamentals product; Reuters Estimates, an earnings estimates product; Reuters Aftermarket (Embargoed) Research Database, an analyst research distribution product; and, Reuters Economics formerly EcoWin, a global economic and financial database covering more than 100 countries.
In a statement, the US Department of Justice’s Antitrust Division said it concluded that the transaction would have eliminated competition between Thomson and Reuters and likely led to higher prices and reduced innovation for fundamentals data, earnings estimates data, and aftermarket research reports.
Thomson and Reuters must license related intellectual property, provide access to personnel and transitional support to ensure that the buyer of each set of data can continue to update its database.
In a conference call, Reuters CEO Tom Glocer said the companies expect to “get value for money” from the sales because they are good assets and there is “more than one party interested in them.”
Overall, this is an extremely good outcome for Thomson and Reuters. They are selling copies of the weaker of their two databases in each category, getting paid and not giving up ownership.
I can see Morningstar Inc., which recently acquired Hemscott’s equity data products and IR website business, being one of the potential buyers of the WorldScope, Reuters Estimates or Reuters Research data. FactSet Research Systems Inc., which already integrates the databases in its products, could be another potential buyer.
From an IR website industry perspective, having an alternative to Thomson and Reuters for fundamentals and estimates will probably be helpful to firms that compete against Thomson Financial’s corporate services division and currently use Reuters for much of their market and financial data. Investis in the UK springs to mind.
Thomson and Reuters now expect to complete the deal by April 13. Reuters and Thomson shareholder meetings have been scheduled for March 26.