A consortium led by American private equity firm Blackstone has agreed to acquire a 55% stake in Thomson Reuters’ financial and risk (F&R) business for around $17bn.
The consortium also includes Canada Pension Plan Investment Board (CPPIB) and Singaporean sovereign wealth fund GIC.
The F&R unit offers global content sets such as fundamentals, estimates and primary and secondary research along with various tools for financial markets professionals. The business division generated revenues of $6.1bn in 2016.
The deal, slated to be completed in the second half of 2018, values the F&R business at nearly $20bn.
Under the arrangement, the F&R arm will be spun out as a separate business and its remaining 45% stake will be held by Thomson Reuters.
The new entity will be run by a 10-member board, comprising five Blackstone representatives and four representatives from Thomson Reuters.
The deal consideration includes $3bn in cash from Blackstone and $14bn funded through new debt and preferred equity.
Blackstone senior managing director Martin Brand said: 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.
“The partnership with Blackstone provides an opportunity to increase efficiency and accelerate revenue growth through innovation and focus on creating uniquely compelling products for F&R’s customers.”
The Toronto-based digital information firm will however retain full ownership of Reuters News as well as its legal, tax and accounting operations.
Meanwhile, the F&R business has also committed to pay at least $325m annually for 30 years to Reuters News for access to Reuters news and editorial content.
Thomson Reuters president and CEO Jim Smith said: “This deal strengthens F&R and should accelerate its growth and benefit its 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.”