Even for a firm that's in the business of creating headlines, this one is special: British-based Reuters today announced that its board had agreed, after weeks of negotiations, to a $17.2 billion takeover bid from Canadian information provider Thomson. Assuming anti-trust regulators in the E.U., U.S. and U.K. sign off, the deal will forge the world's largest business news and information provider. Thomson-Reuters, as that merged business is to be known, will be led by current Reuters CEO Tom Glocer.
The marriage will set up an epic clash for the $12.5 billion market providing news and, more importantly, financial data to the world's financial services industries. Adding Reuters' 23% of the financial data market to Thomson's 11% would give the combined entity 34%, pushing it ahead of the current market leader, Bloomberg, which accounts for 33%.
Founded by former Salomon Brothers partner and current New York City Mayor Michael Bloomberg, Bloomberg has grown agressively since its founding in 1981 by catering more exclusively than its diversified rivals' to financial professionals' need for accurate, reliable and fast access to a wide variety of historical and real-time business data. With Bloomberg now boasting almost a quarter of a million clients, it is hard to find a trader or money manager in any financial office without one of the company's distinctive, multi-screen terminals on his or her desk. The Thomson-Reuters merger, however, leaves no doubt that the two older, outflanked companies are serious about doing together what they failed to do alone: showing down the upstart. "It would take a very brave company not to be somewhat alarmed" by the tie-up says Theresa Wise, a London-based partner at consultants Accenture.
That said, with the combined Thomson-Reuters and Bloomberg now so evenly matched, they may enter a kind of Cold War, with neither company able to dominate the other. If today's deal is sure to draw regulators' attention, for example, any play by Bloomberg to pick up additional market share via acquisition would likely draw even closer anti-trust scrutiny.
In the short term, there may even be potential benefits for Bloomberg. As with any merger between two sprawling companies (although almost all of Reuters' revenue comes from its financial services business, it also feeds news, TV footage and photographs to the world's media organizations and Thomson also has a large legal information business) it will be time-consuming, not to mention tricky, for those firms to mesh. Whether a dream pairing or a disaster, at least you can be confident that with so many news organizations involved, you'll always be sure to read all about it.