Reuters and BT agree Radianz deal

Reuters and BT agree Radianz deal

Reuters has agreed the sale of financial extranet Radianz to BT for $175 million and signalled its plans to exit the data network business by signing a $3 billion, eight-and-a-half year managed services contract with the UK telco.

The $175m purchase price for Radianz is exclusive of any cash remaining on the balance sheet, net of working capital adjustments, at the date of completion. When the deal was first announced in October, Reuters said it would buy out the 49% stake in the venture owned by network partner Equant for $110 million cash.

Radianz had reported net assets of $185m as at 31 December, 2004 and a loss before tax of $2 million. A Reuters' spokesman declined to put a figure on Radianz' cash assets, but said the additional funds would bring the purchase price closer to the $225 million valuation implied by the Equant buy-out.

Speaking to reporters, Andy Green, who runs BT's global services unit, said he expects Radianz to turn a profit for the first time this year. He says the company aims to double Radianz' sales to $200 million by seeking out mega clients such as Goldman Sachs.

Ben Verwaayen, chief executive, BT, says the acquisition "is of strategic importance as the global financial services market offers a huge opportunity to BT, and this will form the cornerstone of our approach to this sector".

Reuters says it will use the proceeds of the sale to pay down debt and invest in its business, adding that future funding obligations of $44 million to Radianz will be extinguished.

Under the network services agreement, BT will provide and manage secure data networks for Reuters products and services worldwide.

The completion of the network services agreement is subject to the completion of the acquisition of Radianz by BT, which is expected in the next three months.

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