Why Shares of Thomson Reuters Surged Today

A multibillion-dollar deal with a private equity firm is in the works.

Timothy Green
Timothy Green
Jan 30, 2018 at 12:08PM
Consumer Goods

What happened

Shares of Thomson Reuters (NYSE:TRI) jumped on Tuesday after reports that Blackstone (NYSE:BX) was in talks to buy a majority stake in the financial and risk business. Thomson Reuters stock was up about 9.5% as of 11:15 a.m. EST, while shares of Blackstone were down 1.4%.

So what

Blackstone is reportedly considering taking a 55% stake in the financial and risk segment of Thomson Reuters. Such a deal would value the business at roughly $20 billion including debt. This business is responsible for more than half of Thomson Reuters' annual revenue, according to a report from Reuters.

A notepad page titled M&A with a drawing of a big fish eating a little fish.

Image source: Getty Images.

The transaction will reportedly involve a $4 billion cash payment from Blackstone, along with $13 billion of new debt taken on by the partnership that will be created by the deal. Thomson Reuters confirmed that discussions are ongoing, giving no further details.

Thomson Reuters cut 2,500 jobs from its financial and risk business back in 2013 in an effort to cut costs and turn it around. The deal would not involve Thomson Reuters' international news service or its legal, tax, and accounting divisions.

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Now what

With Thomson Reuters confirming the discussions, it looks like the odds of a deal are high. In a staff memo obtained by Reuters, Thomson Reuters CEO Jim Smith said: "The progress we have made turning around the F&R business and its future potential are reflected by Blackstone's interest. We believe F&R is well positioned within Thomson Reuters, but it could be even stronger with a partner like Blackstone."

With the talks at an advanced stage, a deal could be announced at any time.