Reuters pulls out of bidding for Merrill contract
12 November 2002 | 4458 views | 0
Reuters has pulled out of the bidding to supply a new retail brokerage system to Merrill Lynch after refusing to undercut its prices to match competing bids from Thomson Financial.
Tom Glocer, Reuters chief executive, says: "We have been involved in detailed talks with Merrill Lynch for several months. We offered the solution the users preferred, however, we were not prepared to lower our price to buy business. We have worked very hard to improve our margins in 2002, and even for a valued client like Merrill Lynch we will not compromise this progress."
Reuters shares dropped four per cent on the news to stand at 190 pence. The supplier has lost some 70 per cent of its market value over the past year amid heavy cost-cutting by investment banking clients and intense competition.
Reuters was believed to be the frontrunner to win the contract with Merrill Lynch, ousting incumbent supplier Thomson Financial in a deal valued at some £100 million a year in revenues. The highly-prized contract, specifying the supply of a full retail broking information system including some 27,000 broker desktops in the United States and 1500 overseas positions, is now expected to be won by Thomson.
Thomson has vowed to undercut the premium prices charged by Reuters and Bloomberg in a bid to raise its market share in the dealing room information business.
Merrill Lynch put out a statement at 9am New York time, confirming the emergence of Thomson as the preferred provider. Final negotiations are expected to be concluded within the next couple of weeks.