May 15 (Bloomberg) -- Thomson Corp., owner of the Westlaw Legal database and TradeWeb bond-trading network, agreed to buy Reuters Group Plc for 8.7 billion pounds ($17.2 billion) to become the biggest financial news and information company.

Shareholders of London-based Reuters will get 691 pence in cash and stock for each share, the companies said today. That's 40 percent more than the price on May 3, the day before Reuters, the dominant service for trading currencies, said it was in takeover talks.

The acquisition of Reuters, the 156-year-old news organization that has grown to 2,400 journalists in 131 countries, will increase Toronto-based Thomson's sales to $11 billion and triple its share of the financial data market to 34 percent. Reuters stock rose to 626 pence, trading below the offer price on concern that antitrust regulators will block the deal.

Regulatory approval is ``the remaining key hurdle,'' said Anthony de Larrinaga, an analyst at Societe Generale in London. ``There's probably a 75 percent chance of the deal going through,'' he said.

Shares of Thomson, a former owner of newspapers including the London-based Times, fell as much as 60 cents, or 1.3 percent, to C$45.76 in Toronto, and traded at C$46.07 at 12:23 p.m. in Toronto.

Reuters shareholders will receive 352.5 pence in cash and 0.16 Thomson share for each Reuters share, the companies said in a statement. The acquisition won approval from the Reuters Founders Share Co., a board that controls a single share with special voting rights, the companies said.

Dual Listing

Reuters Chief Executive Officer Tom Glocer will become CEO of Thomson-Reuters. Thomson Corp. Chairman David Thomson, a 49- year-old grandson of founder Roy Thomson, will be chairman of the combined company. Thomson-Reuters will be dual-listed, with shares traded in Canada, the U.S. and the U.K.

Bloomberg LP, the closely held news and financial information company founded by New York City Mayor Michael R. Bloomberg, is the parent of Bloomberg News and competes with Reuters and Thomson in selling information and trading systems to the financial-services industry.

Thomson, Reuters and Bloomberg also compete with New York- based Dow Jones & Co., which got a $5 billion bid from Rupert Murdoch's News Corp. on May 1. Murdoch has offered members of Dow Jones's controlling Bancroft family a seat on News Corp.'s board if they accept his offer.

Bigger Competitor

Combining with Reuters would lift Thomson's share of the financial data market to 34 percent from 11 percent, compared with Bloomberg LP's 33 percent share, based on 2006 figures compiled by Inside Market Data.

Reuters's 196 bureaus would expand Thomson's news organization beyond Thomson Financial News in North America and the AFX News service in Europe. Most of Thomson's management and staff work in the company's offices in Stamford, Connecticut.

The companies said they expect to save more than $500 million annually in three years after the combination. The companies didn't give details on where the cost cuts would be made. ``There will inevitably be some realignment,'' Glocer, 47, said in a conference call with reporters today.

Thomson's offer values Reuters at about 33 times next year's earnings, based on current estimates. News Corp.'s offer for Dow Jones values the publisher at about 39 times earnings. Thomson is offering about 17 times Reuters's 2007 earnings before interest, tax, depreciation and amortization, or Ebitda, also similar to the value placed on Dow Jones by News Corp.

Thomson is being advised by Bear Stearns Cos. and Perella Weinberg Partners. Reuters is being advised by UBS AG, Blackstone Group LP, Citigroup Inc., JPMorgan Cazenove Ltd. and Morgan Stanley.

`Different League'

``For Thomson this deal puts them into a different league,'' said Justin Urquhart Stewart, who helps oversee about $3 billion of shares as director of 7 Investment Management in London. ``Combining with Reuters gives them an international brand name and global strength.''

The U.K. company was founded in 1851 by Paul Julius Reuter, who used homing pigeons to carry news of the Crimean War. The company was the first in Europe to report news of U.S. President Abraham Lincoln's assassination in 1865.

Reuters shares soared as high as 1,623 pence at the peak of the Internet boom in March 2000. The stock slumped as low as 95.38 pence three years later as investors sold technology stocks and the company's sales declined.

``What you see now is that the sector is once again consolidating,'' said Philippe Gijsels, a senior equity strategist at Fortis Global Markets in Brussels. ``The sector has underperformed for seven years.''

Regulation

ABN Amro and Societe Generale lowered their recommendations on Reuters shares to ``hold'' on May 10, citing the potential for the deal to fall through.

``There is some concern that this is going to actually restrict the choice of consumers,'' said Kevin Lyne-Smith, managing director at Julius Baer in Zurich. ``Certainly in the financial industry they have limited choice.''

European Competition Commissioner Neelie Kroes declined to comment today.

Reuters's Glocer said in a conference call today that the companies are ``very confident of the pro-competitive effects of this combination. Customers that I have spoken to have been overwhelmingly supportive of this transaction,'' he said.

Labor unions at Reuters have expressed concern about the deal. The unions, which represent 2,400 editorial staff, yesterday called on the Founders Share board to ``closely scrutinize'' the purchase. The board was established in 1984, when Reuters first sold shares to the public.

Founders Share

Among the principles that the Founders Share board must follow is the requirement that ``Reuters shall at no time pass into the hands of any one interest, group or faction.''

The Thomson family will own 53 percent of the combined company through their Woodbridge holding company. Thomson's minority shareholders will own 23 percent, and Reuters shareholders will have 24 percent.

Thomson-Reuters will adopt the Founders Share company structure, the companies said.

Credit-default swaps-based on 10 million euros ($13.5 billion) of Reuters debt fell 1,000 euros to 23,000 euros, according to Deutsche Bank AG. Credit-default swaps are based on corporate bonds and are used to speculate on a company's ability to repay debt. An decrease indicates improving perceptions of credit quality.

Data Shift

Thomson, which grew from a single newspaper in Timmins, Ontario, into one of the largest newspaper publishers in the world, at one time operated travel companies and department stores and explored for oil. Thomson has since sold many of its assets, including the newspapers, and now gets about 80 percent of its revenue from selling electronic information.

Thomson agreed on May 11 to sell its textbook and educational testing unit for $7.75 billion in cash to fund its bid for Reuters.

At Reuters, Glocer has closed more than 80 units and sold assets including electronic broker Instinet Group Inc. since becoming CEO in 2001. He also reduced costs by moving some editorial and data analysis jobs to Bangalore, India.

Reuters generates about two-thirds of its 2.57 billion pounds of annual revenue from selling terminals to banks, traders and financial institutions. The company provides financial analysis and data, as well as news to newspapers.

To contact the reporter on this story: Mark Herlihy in London at Mherlihy1@bloomberg.net.

Last Updated: May 15, 2007 12:28 EDT