Reuters agrees to Thomson takeover

The boards of Thomson and Reuters intend to recommend the Transaction to their shareholders.

Woodbridge, the Thomson family holding company which controls approximately 70% of Thomson, has irrevocably committed to vote in favour of the Transaction and the Reuters Founders Share Company, which controls a special share in Reuters, has resolved to support the Transaction.

The boards of Thomson and Reuters believe there is a natural fit and compelling logic in creating a global leader in electronic information services, trading systems and news:

• Customers will benefit from seamless access to richer content and broader capabilities across financial and professional markets from a trusted provider
• The Combined Business will be positioned to benefit from the continuing shift towards electronic delivery of information to professional and financial customers
• Complementary geographic and product markets
• Diversified revenue streams and a larger capital base will provide a stable platform from which to invest and grow
• Thomson and Reuters brands will be maintained in their key areas of strength
• Synergies at an annual run-rate of in excess of US$500 million expected by the end of the third year after closing
• Complementary management culture and values
• Dual listed company structure will allow the Combined Business to have listings in Canada, the UK and the US and will enable both sets of shareholders to participate in further value creation
• The Combined Business will adopt the Reuter Trust Principles

The combination will be effected through a dual listed company structure. The companies will be separate legal entities but will be managed and operated as if they were a single economic enterprise. The companies' economic interests will be aligned and they will pursue common objectives. The boards of the two companies will be identical and the Combined Business will be managed by a single senior executive management team. Thomson will be renamed Thomson-Reuters Corporation. The Combined Business will be called Thomson-Reuters and the combined Thomson Financial unit and Reuters financial and media businesses will be called Reuters. The existing Thomson professional businesses - Legal, Tax & Accounting, Scientific and Healthcare - will together be known as Thomson-Reuters Professional.

To effect the Transaction, Reuters will be acquired by a newly formed UK holding company, Thomson-Reuters PLC, through a scheme of arrangement in which each Reuters Share will be entitled to 352.5 pence per share in cash and 0.16 Thomson-Reuters PLC shares. Each Thomson-Reuters PLC Share will be equivalent to one Thomson-Reuters Corporation Share. Based on the closing Thomson share price of C$48.46 on the Toronto Stock Exchange on Thursday 3 May 2007, the day before the initial announcement by Reuters (and at an exchange rate of GBP 1: C$2.19795), this would value each Reuters share at approximately 705 pence representing a premium of approximately 43% to the closing share price of Reuters on Thursday 3 May 2007. Based on the closing Thomson share price of C$46.36 and exchange rate of GBP 1: C$2.19360 on 14 May 2007, the day before this announcement, this would value each Reuters Share at approximately 691 pence and values the entire existing issued share capital of Reuters at approximately GBP 8.7 billion. The cash consideration for the Transaction will be funded by Thomson.

Based on current issued share capital, 201,095,235 shares in Thomson-Reuters PLC will be issued to Reuters Shareholders in the Transaction on completion. On that basis, Woodbridge will own approximately 53% of the Combined Business, other Thomson Shareholders approximately 23% and Reuters Shareholders approximately 24%.

The Combined Business will adopt the Reuter Trust Principles and Reuters Founders Share Company structure. Woodbridge has agreed that it will use its voting control to support the Reuter Trust Principles.

The Transaction is subject to the pre-conditions of anti-trust clearances, all of which are waivable. Thomson has undertaken to take whatever steps are required to procure such clearances. Upon receipt of anti-trust clearances, documentation will be posted to Reuters Shareholders to approve a court-approved scheme of arrangement to establish Thomson-Reuters PLC as the new holding company of Reuters. Around the same time, documentation will be posted to Thomson Shareholders to effect a court-approved Ontario Plan of Arrangement to effect the Transaction.

Reuters CEO, Tom Glocer, 47, will become CEO of the Combined Business at the time the Transaction closes. Thomson President and CEO, Richard J. Harrington, 60, who led the transformation of the company from traditional publishing to electronic solutions, software and services, will retire at the completion of the Transaction. Devin Wenig, currently COO of Reuters, will be CEO of Reuters (the combined Thomson Financial unit and Reuters financial and media businesses) and Jim Smith, currently COO of Thomson, will be CEO of Thomson-Reuters Professional. Other members of the senior management team will include Bob Daleo (currently Thomson CFO) as CFO, Michael Wilens (currently Thomson CTO) as CTO, Stephen Dando (currently Reuters Group HR Director) as Chief Human Resources Officer, and David Schlesinger (currently Reuters Editor-in-Chief) as Editor-in-Chief.

The Chairman will be David Thomson, and the Deputy Chairmen will be W. Geoffrey Beattie and Niall FitzGerald who will also serve as Senior Independent Director.

David Thomson, Chairman of Thomson, said "We are enormously proud of the evolution of The Thomson Corporation and the value it has created for all our shareholders. We recognize the rich history of Reuters and are committed to uphold the Reuter Trust Principles. I am pleased to welcome Niall and Tom and look forward to working with them to grow our business."

Niall FitzGerald, Chairman of Reuters, said "This is an historic day for Reuters and represents an important chapter in the development of our company and the commitment to our heritage. The shared expertise and complementary strengths of these two companies makes for a strategically compelling and financially attractive combination. I am especially proud that Reuters journalism will continue to be governed by the powerful Reuter Trust Principles of independence, integrity and freedom from bias."

Thomson President and CEO, Richard J. Harrington, said "This combination marks a strategic milestone for both companies. For Thomson, it is a defining moment in our journey to become the information provider of choice for the world's business and professional markets. Thomson has a long history of creating value for all its stakeholders and this Transaction builds on that tradition."

Tom Glocer, CEO of Reuters, said "I am looking forward to the opportunity of being the first CEO of Thomson-Reuters. The combination of these two great businesses will create an exceptional global information company guided by the Reuter Trust Principles. It will provide a broader offering to our customers, deliver value to our shareholders and create great opportunities for our people."

Pehr Gyllenhammar, Chairman of the Trustees, said "The Trustees are pleased to give their support to the proposed business combination of Thomson and Reuters. We believe that the formation of Thomson-Reuters marks a watershed in the global information business, and will underpin the strength, integrity and sustainability of Reuters as a global leader in news and financial information for many years to come."

This summary should be read in conjunction with the full text of this announcement.

A Thomson and Reuters briefing for investors and analysts will be webcast live today at 09:30 BST / 04:30 EDT and available for replay at 14:00 BST / 09:00 EDT

Thomson and Reuters will also hold a conference call and webcast for U.S. investors at 08:30 EDT / 13:30 BST.

The directors of Thomson and Reuters accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of Thomson and Reuters (who have taken all reasonable care to ensure such is the case), the information contained herein for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.

Bear Stearns is acting as financial adviser to Thomson and no one else in connection with the Transaction and will not be responsible to anyone other than Thomson for providing the protections afforded to the clients of Bear Stearns nor for providing advice in relation to the Transaction or any other matter referred to herein.

Perella Weinberg is acting as financial adviser to Thomson and no one else in connection with the Transaction and will not be responsible to anyone other than Thomson for providing the protections afforded to the clients of Perella Weinberg nor for providing advice in relation to the Transaction or any other matter referred to herein.

UBS is acting as financial adviser and is also providing corporate broking advice to Reuters and no one else in connection with the Transaction and will not be responsible to anyone other than Reuters for providing the protections afforded to the clients of UBS nor for providing advice in relation to the Transaction or any other matter referred to herein.

Blackstone is acting as financial adviser to Reuters and no one else in connection with the Transaction and will not be responsible to anyone other than Reuters for providing the protections afforded to the clients of Blackstone nor for providing advice in relation to the Transaction or any other matter referred to herein.

Citi and JPMorgan Cazenove are acting as joint corporate brokers to Reuters and are also providing financial advice to Reuters. They are acting for no one else in connection with the Transaction and will not be responsible to anyone other than Reuters for providing the protections afforded to the clients of Citi and JPMorgan Cazenove, respectively, nor for providing advice in relation to the Transaction or any other matter referred to herein.

Morgan Stanley has also provided financial advice to Reuters and is acting for no one else in connection with the Transaction and will not be responsible to anyone other than Reuters for providing the protections afforded to the clients of Morgan Stanley nor for providing advice in relation to the Transaction or any other matter referred to herein.

DEALING DISCLOSURE REQUIREMENTS

Under the provisions of Rule 8.3 of the Takeover Code (the 'Code'), if any person is, or becomes, 'interested' (directly or indirectly) in 1% or more of any class of 'relevant securities' of Thomson or of Reuters, all 'dealings' in any 'relevant securities' of that company (including by means of an option in respect of, or a derivative referenced to, any such 'relevant securities') must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the Transaction becomes, or is declared, unconditional, lapses or is otherwise withdrawn or on which the 'offer period' otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an 'interest' in 'relevant securities' of Thomson or Reuters, they will be deemed to be a single person for the purpose of Rule 8.3.

Under the provisions of Rule 8.1 of the Code, all 'dealings' in 'relevant securities' of Thomson or Reuters by Thomson or Reuters, or by any of their respective 'associates', must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.

A disclosure table, giving details of the companies in whose 'relevant securities' 'dealings' should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website.

'Interests in securities' arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an 'interest' by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.

Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a 'dealing' under Rule 8, you should consult the Panel.

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This press release includes forward-looking statements, such as Thomson's and Reuters beliefs and expectations regarding the proposed combination of the two businesses. These statements are based on certain assumptions and reflect Thomson's and Reuters current expectations. Forward-looking statements also include statements about Thomson's and Reuters beliefs and expectations related to the proposed Transaction structure and consideration, benefits that would be afforded to customers, benefits to the Combined Business that are expected to be obtained as a result of the Transaction, as well as the parties' ability to enhance shareholder value through, among other things, the delivery of expected synergies. There can be no assurance that the proposed Transaction will be consummated or that the anticipated benefits will be realised. The proposed Transaction is subject to various regulatory approvals and the fulfilment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or such conditions will be met. All forward-looking statements in this press release are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These risks and uncertainties include: the ability to achieve the cost savings and synergies contemplated through the proposed Transaction; the failure of Reuters shareholders to approve the proposed Transaction; the effect of regulatory conditions, if any, imposed by regulatory authorities; the reaction of Thomson's and Reuters customers, employees and suppliers to the proposed Transaction; the ability to promptly and effectively integrate the businesses of Thomson and Reuters; and the diversion of management time on proposed Transaction-related issues. Additional factors that could cause actual results or events to differ materially from current expectations are discussed in Thomson's and Reuters respective materials filed with the securities regulatory authorities in Canada, the United Kingdom and the United States (as the case may be) from time to time including The Thomson Corporation's 2006 Annual Report on Form 40-F and Reuters Group PLC's 2006 Annual Report on Form 20-F, each of which has been filed with the US Securities and Exchange Commission (SEC). Any forward-looking statements made by or on behalf of Thomson or Reuters speak only as of the date they are made. Thomson and Reuters each disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This document does not constitute an offer for sale of any securities or an offer or an invitation to purchase any such securities. Following satisfaction or waiver of the pre-conditions to the proposed Transaction, documents relating to the proposed Transaction will be furnished to or filed with the SEC. Shareholders are urged to read such documents regarding the proposed Transaction if and when they become available, because they will contain important information. Shareholders will be able to obtain free copies of these documents, as well as other filings containing information about the companies, without charge, at the SEC's web site at www.sec.gov, at the Canadian securities regulatory authorities' web site at www.sedar.com (in the case of Thomson) and from Thomson and Reuters. These documents will also be available for inspection and copying at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, US.

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