Blackstone Group LP, the private equity giant led by Stephen Schwarzman, is considering its biggest foray yet into the $27 billion-a-year industry for financial information.
The firm is in talks to buy a 55 percent stake in Thomson Reuters Corp.’s largest unit, which supplies data and analytical tools to financial professionals, a person familiar with the matter said. Thomson Reuters, controlled by one of Canada’s richest families, would cede its flagship Eikon terminal business while keeping the news operations, as well as ownership of its legal, tax and accounting arm.
The division is worth about $20 billion, the person said, meaning any purchase would be one of the largest transactions in the industry since Thomson took over Reuters in 2008. Should it go ahead, Blackstone would compete directly with Bloomberg LP and News Corp.’s Dow Jones division in selling financial services and trading tools.
“For Blackstone, the simple attraction is fairly clear,” said Neil Campling, an analyst at Mirabaud Securities Ltd. in London, pointing to the high proportion of recurring subscription-based revenue at the financial and risk unit.
Advanced Talks
While the talks are advanced, they may or may not lead to a deal, Toronto-based Thomson Reuters said in a statement late Monday. The board of Thomson Reuters is expected to meet Tuesday to discuss the deal, Reuters reported earlier.
Blackstone already owns the financial-technology firm Ipreo Holdings LLC, which it purchased together with Goldman Sachs Group Inc. for $975 million in 2014. Blackstone declined to comment.
The Thomson Reuters financial and risk unit, which also sells regulatory and risk management solutions to customers, got 77 percent of its $6.1 billion in revenue in 2016 from subscriptions to its products and 15 percent from transaction fees. The news service is expected to continue to supply Eikon and other products, according to a report by Reuters.
Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news, data and information to the financial industry. Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.
Bloomberg had a 33.4 percent market share in 2016, compared with 23.1 percent for Thomson Reuters, according to Burton-Taylor International Consulting LLC.
A deal would force Thomson Reuters to consider the future of the loss-making unit where the news business resides, which it already reports separately from the financial and risk unit that drives more than half of earnings. The corporate division, including news, reported a $321 million loss in adjusted earnings before interest, taxes, depreciation and amortization in 2016.