Blackstone bets big on Wall St. information business with Thomson Reuters deal

LONDON/ NEW YORK: US private equity firm Blackstone Group LP catapulted itself into the major leagues of Wall Street’s financial information industry with the acquisition of a majority stake in the Financial and Risk business of Thomson Reuters Corp .

The US$ 20 billion deal is Blackstone’s biggest bet since the financial crisis and pits co-founder Stephen Schwarzman against fellow billionaire and former New York Mayor Michael Bloomberg.

Bloomberg’s eponymous terminals are the market leader in providing traders, bankers and investors with news, data and analytics.

Blackstone will acquire a 55 per cent stake in a newly hived off F&R business, a statement from both companies said.

Thomson Reuters will retain a 45 per cent holding and will receive approximately US$17 billion, including about US$3 billion in cash and US$ 14 billion of debt and preferred equity issued by the new business, the companies said.

The deal will give Thomson Reuters, controlled by Canada’s Thomson family, a formidable ally as it seeks to reinvigorate a business facing challenges from a shrinking and budgetconscious customer base.

Blackstone has a track record of cutting costs and, as one of the world’s biggest investors, it has business relationships with most of the major banks on Wall Street that are clients for Thomson Reuters’ flagship desktop product Eikon.

The Canada Pension Plan Investment Board and Singapore’s GIC will invest alongside Blackstone. The amount they will provide was not revealed. The Canada Pension Plan Investment Board declined to comment.

A spokeswoman for GIC declined to comment.

Talks on a possible deal began in earnest last summer, two sources familiar with the negotiations said.

The partnership will be managed by a 10-person board composed of five representatives from Blackstone and four from Thomson Reuters.

The President and CEO of the new partnership will serve as a non-voting member of the board following the closing of the transaction. The companies did not say who that person would be.

Thomson Reuters has relied heavily on cost cutting in recent years as its core customers, including banks, brokerages and investment houses, retrench in the face of weak trading conditions, tougher regulations and the rise of passive investing.

US-listed shares of Thomson Reuters were up 2.2 per cent at US$47.52 in extended trading, after rising 7.1 per cent in the regular session, while shares of Blackstone were down 0.2 per cent after the bell. — Reuters