Blackstone leads deal for Reuters data unit
CPPIB, Singapore fund part of US$20B buyout
A group led by Blackstone Group agreed to buy a majority stake in Thomson Reuters Corp.’ s financial and risk unit in a deal that values the business at US$20 billion, sealing plans for the firm’s biggest buyout in a decade.
Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund, GIC Pte, will co-invest alongside Blackstone to acquire 55 per cent of the business, according to a statement Tuesday. Thomson Reuters will retain a 45 per cent equity stake. The unit, which provides data, analytics and trading to Wall Street and financial professionals around the world, doesn’t include the news-gathering operation.
“We are delighted to partner with Thomson Reuters in continuing to grow the financial and risk business,” Joe Baratta, Blackstone’s global head of private equity, said in the statement. “This is a landmark transaction for Blackstone and our investment partners.”
Thomson Reuters said it will receive about US$17 billion in proceeds, consisting of US$ 3 billion from the Blackstone- led group and US$ 14 billion in debt and preferred equity. The company will use the money to repay debt, establish a new standalone company, pursue organic growth and M& A and repurchase stock, according to the statement.
The new company also entered a 30- year agreement to pay Reuters News at least US$ 325 million a year for its news and editorial content, according to the statement.
Blackstone sees attractive growth in the Thomson Reuters unit’s data feed, its foreign exchange and treasury trading platforms, as well as its risk and compliance business, a person familiar with the matter said before the deal was announced. The division would also be able to improve operations more quickly as a private company, the person said.
The F& R unit accounted for more than half of adjusted earnings before interest, taxes, depreciation and amortization in 2016.
“Blackstone’s strong relationships in the financial services industry and long and successful history of corporate partnerships will help F&R provide new and innovative products and services,” said Jim Smith, president and chief executive officer of Thomson Reuters.
Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news, data and information to the financial industry. Peter Grauer, chairman of Bloomberg LP, is a nonexecutive director at Blackstone.
The transaction, Blackstone’s biggest by enterprise value since the firm’s US $26billion buyout of Hilton Worldwide Holdings Inc., harks back to private equity’s so- called Golden Age, when firms bought about 20 supersized companies from 2005 to 2007. It will add to the US$ 105 billion of private equity deals targeting the media and technology industries over the past 12 months, according to data compiled by Bloomberg.
The Thomson Reuters deal will be done by Blackstone’s private equity unit, which is in the process of deploying an US$ 18- billion fund. It is expected to close in the second half of 2018.
Canson Capital Partners, Bank of America Corp.’s Merrill Lynch, Citigroup Inc. and J.P. Morgan Chase & Co. were financial advisers to the Blackstone- led consortium, with Simpson Thacher & Bartlett LLP providing legal advice.