Considered its largest deal since the financial crisis, global investment firm Blackstone has entered a strategic partnership with Thomson Reuters to acquire 55% of the latter’s financial and risk (F&R) business for $17 billion.
To pay for the deal, Canada Pension Plan Investment Board (CPPIB) and Singapore’s sovereign wealth fund GIC contributed $3 billion in cash. The remaining $14 billion will be funded by debt and preferred equity.
The transaction values the F&R business at approximately $20 billion and Thomson Reuters will receive approximately $17 billion in gross proceeds at closing. Thomson Reuters will retain a 45% interest in the F&R business and will also maintain full ownership of its Legal, Tax & Accounting and the Reuters News businesses.
Blackstone senior managing director Martin Brand said the partnership provides an opportunity to increase efficiency and accelerate revenue growth through innovation, as well as focusing on creating compelling products for F&R’s customers.
He said: “We are excited to partner with Thomson Reuters – one of the most trusted companies in financial technology. The F&R division has tremendous assets, including a world-leading data business, essential risk and compliance solutions, OTC trading venues, wealth management software, and a strong desktop business.”
Thomson Reuters president and CEO Jim Smith noted that this deal would strengthen F&R, accelerating its growth to benefit customers across the sell-side, buy-side and trading venues.
“Blackstone’s strong relationships in the financial services industry and long and successful history of corporate partnerships will help F&R provide new and innovative products and services, drive further efficiencies and navigate ongoing industry consolidation,” he said.
The new partnership will be managed by a 10-person board composed of five representatives from Blackstone and four from Thomson Reuters. The president and CEO of the new partnership will serve as a non-voting member of the board following the closing of the transaction.