• by Erik Sass , May 8, 2007

Reuters is set to accept a buyout from Thomson Corporation, a Canadian company also specializing in financial news, according to a Friday report from The Financial Times.

The paper's Web site didn't quote any sources or a price for the deal. Practically speaking, the bid remains up in the air, with numerous caveats arising from Reuters' complex ownership and management structure. For openers, its success hinges on approval from a special oversight committee called the Reuters Founder Share Co., which has the power to stop it.

The merger of Reuters--a financial news agency--and Thomson would create the world's largest financial-news organization, combining Reuters' roughly 15,500 employees with Thomson Financial's 9,300. (Thomson Corp. has 32,000 total employees, working in divisions covering legal, health care, scientific and tax and accounting news).

Thomson made its bid for Reuters after several strong years at both companies.

In 2006, Reuters' revenue rose 8% to a total $6.6 billion, as profit rose 7% to $1.3 billion on a year-over-year basis. In 2006, Thomson Financial saw revenue rise 6% to $2 billion, while profit increased 13% to $379 million. More recently, the first quarter of 2007 saw Thomson Corporation's revenues rise 11% to $1.7 billion, as profits rose 8% to $226 million, compared to the same period last year.

In 2007, Reuters' first-quarter results were negatively affected by the weakening U.S. dollar, which accounts for about 47% of the company's global revenues, and which fell more than 10% against the pound between early 2006 and early 2007. However, its underlying global growth rate was still 6.5%, to about $1.23 billion using current U.S. dollar values.

In the same comparison period, its American business grew 10% and Asia grew 6%. Earlier, for the full year 2006, Reuters' revenues rose 6.2% compared to 2005, to about $4.68 billion on a constant currency basis, as operating profit rose 24% to about $468 million.

The Thomson bid came close on the heels of Rupert Murdoch's bid for the Dow Jones Company, which owns The Wall Street Journal. Murdoch's News Corp. bid has since been rebuffed by the Bancroft family, which controls Dow Jones.

Also on Friday, a Bloomberg LG spokeswoman said it was not interested in bidding for Reuters or Dow Jones.