Thomson Reuters has signed a definitive agreement to sell a majority 55% stake in its financial and risk division to private equity funds managed by Blackstone.
The transaction values the F&R business at approximately $20 billion. Thomson Reuters will receive $17 billion in gross proceeds at closing funded by $14 billion of debt and preferred equity to be incurred by the partnership and a $3 billion cash equity contribution by Blackstone.
The financial and risk unit, which provides market data, analytics and trading terminals to banks worldwide, generates more than half of Thomson Reuters annual turnover, reporting $6.1 billion in revenues in 2016.
The business has been in the doldrums since the 2008 crash but is now viewed as an undervalued asset in a market characterised by robust growth and a slew of new data-hungry regulatory measures.
Martin Brand, a senior managing director at Blackstone, says: “The F&R division has tremendous assets, including a world-leading data business, essential risk and compliance solutions, OTC trading venues, wealth management software, and a strong desktop business. The partnership with Blackstone provides an opportunity to increase efficiency and accelerate revenue growth through innovation.”
The new 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.
As part of the deal, Blackstone has secured a 30-year agreement with Reuters' news division for continued editorial content at a price of $325 million annually.