Reuters is in negotiations to be taken over by Thomson Corporation of Canada in an £8 billion deal that would create a financial information powerhouse to rival the market leader, Bloomberg.

The deal being discussed could result in Tom Glocer, Reuters chief executive, taking the helm of the larger Thomson, although weeks of delicate negotiations lie ahead before any tie-up, which will be billed as a merger, can be concluded.

No price for the acquisition has yet been fixed, but Reuters shares soared 25 per cent to 615¾p, as the market tried to estimate the likely premium. That followed an admission that Reuters had a “preliminary approach,” and valued the company at £7.6 billion.

Thomson executives, and the group's controlling family of the same name, will have to engage with members of Reuters Founders Share Company, which exists to safeguard the integrity and independence of the company’s news output. The Founders Share Company, an independent group of 18 people, controls a poison pill that can block any takeover.

BACKGROUND

• Hedge fund takes stake in Reuters

• Reuters chief to receive £27m after takeover

• Thomson and Reuters agree £8.7bn takeover

• Thomson cashes in on learning division

• Bid likely to cap Reuters at £8.8bn

Has Reuters chosen the right way?

The deal with Thomson marks a shift away from Reuters' roots in journalism and into a future of financial analytics

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Pehr Gyllenhammer, the chairman, a former chairman of Aviva, has been consulted, but most of the members are not aware of Thomson’s interest. Mr Gyllenhammer has previously indicated that he is not averse to a takeover of Reuters, as long as the company’s news output remains independent and unbiased.

The Thomson family, headed by David, who is the chairman of Reuters’s would-be new owner, owns 70 per cent of the company — a size of holding that could be interpreted as a breach of the Reuters Founders principle that the company “shall at no time pass into the hands of any one interest, group or faction”.

However, the Thomsons — who once owned The Times — have long allowed professional managers to run the business, and Reuters is hopeful that the poison pill will not be exercised to prevent a merger that is clearly popular with the City.

Thomson is the larger of the two companies because of its interests in the supply of legal and other professional information, although it is smaller in financial services than Reuters. Its chief executive, Richard Harrington, is 60, and he may be willing to make way for the younger Mr Glocer.

Thomson’s market value is $28 billion (£14 billion), but it has only an estimated 11 per cent of the market for financial data, according to Inside Market Data Reference. Reuters’s share was 23 per cent, comfortably behind Bloomberg’s 33 per cent. Of the three, Bloomberg’s growth in 2006, at 15 per cent, was the fastest — compared with 9 per cent for Reuters and 5 per cent at Thomson.

David Anderson, the editor of Inside Market Data, said: “The two businesses are complementary, in that Thomson is strong in investment banking, whereas Reuters leads in sales and trading. But the last deals Reuters did — with Telerate and Bridge — got them tied up in knots.”

Bloomberg, meanwhile, is expected to remain on the sidelines. The privately held concern, 68 per cent owned by Mike Bloomberg, the Mayor of New York, has built its business organically.

On the wire

1851: Paul Julius Reuter, a German-born immigrant, opens an office in the City of London that transmits stock market quotations between London and Paris via the new Calais-Dover cable. Agency becomes known as Reuters
1872: business expands beyond Europe to include the Far East and then South America
1883: begins using a “column printer” to transmit messages electrically to London newspapers
1923: pioneers use of radio to transmit news internationally
1925: Press Association takes a majority holding
1939: moves to 85 Fleet Street
1984: becomes public company listed on LSE and Nasdaq
1985: Acquires Visnews, renamed Reuters Television
2001: makes largest acquisition by buying Bridge Information Systems
2002: first pretax loss since flotation
2005: moves to Canary Wharf

Business big shot: Tom Glocer

Few FTSE 100 chief executives have their own blogs, but Tom Glocer, head of Reuters, is one who does. It was somewhat untimely that tomglocer.com’s “front page news” yesterday was about his recent trip to Brazil, rather than an insight into the bid for Reuters that sent its share price soaring.

However, the website does offer almost all you ever wanted to know about the 47-year-old American, who joined the group in 1993 in New York as vice-president and deputy counsel of Reuters America. He soon climbed the corporate ladder, becoming chief executive of Reuters Latin America in 1997 and being elevated to the same post in Reuters America two years later.

Mr Glocer joined Reuters’s board in June 2000 and became group chief executive just over a year on.

Mr Glocer is a political science graduate of Columbia University, attended Yale Law School and was a mergers and acquisitions lawyer before joining Reuters – which may come in handy as the bid progresses. According to his blog, he reads The Economist and The New Yorker, online content from Reuters (“of course”), BreakingViews and “anything by Roth, Rushdie, Saramago, Camus, Mahfouz, Mann, Dostoevsky, Helprin, Marquez, Houellebecq”.

He adds: “If you want a view of how Reuters deals with globalisation, see pages 16-21 in Tom Friedman’s book The World is Flat.”

He is on the Whitney Museum of American Art’s corporate council and the Tate’s corporate advisory group. (Chris Johnston)

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