- Divests unit to Onex, Baring Private Equity for $3.55 billion
- Intends to use $1 billion of proceeds to buy back stock
Thomson Reuters Corp. agreed to sell its Intellectual Property & Science division to Onex Corp. and Baring Private Equity Asia for $3.55 billion in cash, shedding the unit to focus on its core financial products.
The media company will use $1 billion of the proceeds to reduce debt and buy back stock as part of a previously announced $1.5 billion plan, according to a Thomson Reuters statement Monday. The division it’s selling provides research and information on trademarks, patents and online brand protection through products such as Thomson CompuMark, Thomson Innovation and MarkMonitor.
Thomson Reuters has been consolidating how it delivers services to save money after losing market share following the financial crisis, according to Bloomberg Intelligence. The New York-based company provides news, data and analytics to the financial industry, as well as law and accounting firms, corporations and governments.
Scott Chan, an analyst at Canaccord Genuity Corp., said he thought the buyers paid a higher multiple for the unit, compared with the “traditional Onex investment,” because of the recurring nature of the business and its low capital-spending requirements. In a note to clients, Chan said that since 2014, 77 percent of the unit’s revenue is recurring, or predictable, and can be counted on in the future.
The company’s shares rose 0.8 percent to $41.20 at 9:46 a.m. in New York. They had climbed 8 percent this year through Friday.
Thomson Reuters said in November it was working with JPMorgan Chase & Co. and Guggenheim Securities to sell the unit, which makes about $1 billion in revenue and has more than 4,000 employees. Potential bidders included Bain Capital, BC Partners, Informa Plc and Carlyle Group LP, people familiar with the matter said last month.
The sale of Philadelphia-based IP&S isn’t subject to any financing condition and Onex and Baring Asia have obtained debt and equity commitments for the deal, Thomson Reuters said. The transaction is expected to close later this year after regulatory approvals.
Bloomberg LP, the parent company of Bloomberg News, competes with Thomson Reuters in providing news and information.