Media giants Reuters and Canada's Thomson Corporation defied concerns among both investors and staff unions today as they unveiled the terms of an agreed takeover that values the legendary newswire at roughly £8.7 billion.

The deal, agreed less than a fortnight after Reuters told the stock market that it had been approached by a prospective buyer, has the support of Woodbridge, the Thomson family holding company that controls 70 per cent of the Canadian news and financial publishing conglomerate.

It has also secured the backing of the Reuters Founders Share Company, the owners of a "golden share" in Reuters, that was previously seen as a potential poison pill that could have prevented a deal from going ahead.

Under the terms of the deal, Tom Glocer, the 47-year-old Reuters boss, will become chief executive of the combined group, to be called Thomson-Reuters, which will oversee two separately run news organistions. Both the Reuters and Thomson brands will be retained.

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

Related Internet Links

• Reuters company information

• Reuters share price chart

• Reuters forecast

Related Links

• Comment: Success story

• Questions over Reuters and Thomson tie-up

• Thomson cashes in on learning division

Richard Harrington, the president and chief executive of Thomson, will retire once the deal completes. Mr Harrington, 60, can take credit for transforming Thomson from a sleepy traditional publisher into a competitive electronic newswire service that competed head to head with Reuters in the market for financial information.

The agreement comes despite unions representing staff in the UK, America and Canada expressing "deep concerns" about a takeover of Reuters, one of the oldest surviving global news agency services. Staff had been concerned that a takeover by Thomson would run counter to an article in Reuters constitution which states that "no person may be interested in 15 per cent or more of Reuters issued shares".

Some investors in Reuters have also expressed reservations about the deal. The share price has lingered below the level expected for the deal on worries about potentially problematic hurdles.

Today, the shares rose 22.25p to 627.75p, still comfortably below the cash and shares price that values Reuters at a maximum of 705p and a minimum of 691p.

Charles Peacock, the director of media research at Seymour Pierce, noted that the agreement of both key shareholders removed two of three obstacles to a successful deal. "This would appear to leave regulatory issues as the main hurdle to clear in completing the transaction," he said.

The takeover still has to be ratified by competition authorities in both Europe and the US.

But Mr Harrington and Mr Glocer both brushed aside these concerns as they unveiled a deal that will value Reuters at £1 a share above last night's closing price of 605.5p.

Mr 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,"

Mr Glocer said he was "looking forward to the opportunity of being the first chief executive of Thomson-Reuters". He said the combination would expand choice for customers and be good news for both shareholders and staff.

Thomson reckons that it can extract cost-savings of $500 million (£250 million) a year by the end of the third anniversary of the deal's completion.

Thomson has been consistently named as a potential buyer of Reuters — a combination that looks set to take on market leader Bloomberg head on, particularly in the US.

But it also comes as the international media landscape experiences a seismic shift. News Corporation, the parent company of The Times and Times Online, is trying to buy Dow Jones, the family owned US news agency that controls flagship newspaper The Wall Street Journal.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive