Acquisition Inquisition

By the time you read this, US and European regulators may already have given their blessing to the takeover of Reuters by Thomson Corp.-which, at a cost of around $17 billion, is the single biggest merger to ever hit the market data industry. By Max Bowie

However, creating the largest data vendor brings with it a whole set of challenges, not least of which will be the mammoth task of integrating the two companies. Both vendors have grown via acquisitions over the years-though never before on this scale.

Indeed, Reuters has continued to buy smaller companies, such as StarMine and Gissing Software, since agreeing to the deal with Thomson.

Already, Thomson and Reuters have named the top and second level of executives who will lead the vendors' combined financial information and media division, which, after a recent re-branding, will now be called Thomson Reuters Markets. The division will be headed by Devin Wenig, currently Reuters' COO.

These appointments have already identified personnel overlap and resulted in a number of current executives slated to depart the company once the deal closes. The most high-profile of these to date are Thomson Financial CEO Sharon Rowlands; Donal Smith, currently president and COO for EMEA and Asia; and Christopher Hagman, managing director of global sales and service operations at Reuters.

In fact, the initial preponderance of Reuters staff within the proposed management led some observers to refer to the deal as "a reverse takeover by Reuters." Of course, in reality, mergers and acquisitions take place for a limited number of reasons, and in this industry these are often to buy market share by purchasing a competitor and their client base, or to acquire a specific product set or technology by buying someone with that content or capability-both of which, at least in theory, Thomson is achieving via Reuters.

However, the latest departures to be announced include Thomson Financial CTO Bill Krivoshik, who joined the vendor from Citigroup in 2005; Reuters CTO Roy Lowrance, who joined the vendor in 2006; and Reuters CIO David Lister, who joined in 2004-all of whom will leave once the deal is completed. James Powell, Reuters CTO for enterprise solutions, will take over as CTO, while Thomson Financial CIO Jane Moran will become CIO of the new entity.

While the vendors are still keeping details under wraps, these appointments could signify that the merged division will favor internal technology platforms from Thomson, as the larger overall corporate entity, while Reuters-as the bigger player in the sales, trading and enterprise data areas much-coveted by Thomson-may still have the upper hand over client-facing technology.

Of course, it's the client-facing products that end users will care about-firstly, whether the services they use will exist post-merger, and secondly, whether users of both vendors will see their overall spend fall as a result of the consolidation and rationalization, or whether firms that use specific products from each vendor could see the cost per product rise as the vendors combine content sets.

Money talks, but it's whether or not the vendors can translate their synergies into savings for clients that will truly speak volumes.

Max Bowie is editor of Inside Market Data and can be reached at max.bowie@incisivemedia.com.

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