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Thomson and Reuters in discussions to form global leader in business-to-business information services


The boards of The Thomson Corporation (“Thomson”) and Reuters Group PLC (“Reuters”) confirm that they are in discussions for the combination of their two businesses. Both boards believe there is a powerful and compelling logic for the combination which would create a global leader in the business-to-business information markets. This transaction would also create enhanced value for shareholders through the delivery of in excess of US$500 million of annual synergies expected to be achieved within three years. The market activity from last Friday and attendant speculation occurred prior to discussions being completed and, as this is a large and complex transaction, much has still to be resolved and there can be no assurance that agreement will be reached.

Under these circumstances, both boards thought that it was in the shareholders’ interests to clarify the status of the discussions as they related to a number of the material aspects of the potential transaction. These are as follows:

The enlarged Group would be called Thomson-Reuters and the combined Thomson Financial unit and Reuters financial and media businesses would be called Reuters.

Key proposed terms:

• Combination to be effected by the creation of a Dual Listed Company structure by means of an equalisation agreement with both companies’ primary listings being maintained. The structure is expected to facilitate retention of the existing equity index inclusions of the two companies.

• Each Reuters share would be entitled to 352.5 pence per share in cash and an equity participation based on an equalisation ratio of 0.1600 Thomson shares for each Reuters share.

• Based on the closing Thomson share price of C$48.46 on the Toronto Stock Exchange on Thursday, 3 May 2007, the day before the announcement by Reuters (and at an exchange rate of C$/£2.19795), this would value each Reuters share at 705 pence representing a premium of 43% to the closing share price of Reuters on Thursday, 3 May 2007.

• Based on the closing Thomson share price and exchange rate on Monday, 7 May 2007 the day before this announcement, this would value each Reuters share at 697 pence per share.

• In addition, Reuters will declare a dividend of 12p for 2007, with 5p payable as an interim dividend and 7p payable as a final dividend subject to proportionate adjustment if closing occurs before year end. If closing occurs after the year end a proportionate 2008 dividend will also be paid. Thomson will also pay dividends in the ordinary course pending closing, including a proportionate adjustment to the date of closing.

• Based on the current issued share capital of Thomson and Reuters, Woodbridge, the Thomson family holding company, would own approximately 53 per cent. of Thomson-Reuters, other Thomson shareholders approximately 23 per cent. and Reuters shareholders approximately 24 per cent.

• Thomson-Reuters to adopt the Reuters Trust Principles and Reuters Founders Share Company structure. Thomson-Reuters and Woodbridge would support the Reuters Trust Principles and Woodbridge has further agreed that it would use its voting control to give effect to this support.

• The boards of the Dual Listed Companies to be identical and consisting of 15 Directors, five of whom are to be current Directors of Reuters (including a Deputy Chairman) and an additional one of whom to be the CEO. Of the remaining nine, not more than four to be from Woodbridge. Woodbridge to be entitled to nominate the Chairman.

• Woodbridge to use its voting control of Thomson to support the transaction.

Thomson President and CEO, Richard J. Harrington, 60, who led the transformation of the company from traditional publishing to electronic solutions, software and services, would retire at the successful completion of the transaction. Reuters CEO, Tom Glocer, 47, would become CEO of the combined company at that time.

It should be emphasised that discussions are at a stage where there can be no assurance that agreement will be reached. No transaction will be announced without the support of the Reuters Founders Share Company. This is a non-waivable pre-condition. Any announcement of a transaction pursuant to rule 2.5 of the Takeover Code would be subject to conditions including antitrust, regulatory and tax clearances and would require approval by both companies’ shareholders (including amendments to both companies’ constitutions).

A further announcement will be made in due course.

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

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 offer becomes, or is declared, unconditional as to acceptances, 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 at

’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.


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