Thomson Reuters has suspended the auction of its
healthcare business, capping a tumultuous year for the information company.
The end of the six-month
process came three weeks after the unexpected news that Tom Glocer would hand
over as chief executive to Jim Smith on January 1.
The Canadian-controlled company
said global economic conditions had become “more challenging” since it
appointed Morgan Stanley and Allen & Co in June to sell the business, and
were “not conducive to concluding a transaction that reflects the fair value of
the healthcare business at this time”.
The deal, which analysts had
expected could yield $1bn or more, is the latest to fall foul of volatile
markets. Data from Thomson Reuters showed this week that Europe’s debt crisis
had contributed to a 32 per cent drop in global dealmaking volumes between the
third and fourth quarters of this year.
Thomson Reuters made clear that
it still intended to sell the business at a later date, saying that it would
report its results under the non-core “other businesses” line in its financial statements.
However, it added that it would continue to invest in its healthcare assets
“until improved market conditions allow the company to complete a divestiture
at attractive terms”.
The business “continues to
perform well with strong revenue growth and expanding margins”, the group said
in a regulatory filing.
Mr Smith, who had run the
professional information division under which the healthcare business sat
before becoming chief operating officer this year, had hoped to use the sale
proceeds to reinvest in faster-growing international markets such as Latin
America and Asia.
Analysts had estimated that a
sale might fetch $850m to $1.2bn for a business with revenues of $450m and
operating margins of about 19 per cent. They had expected interest from groups
including Aetna, Reed Elsevier, TPG and United Healthcare, but had cautioned
that no single buyer looked likely to show interest in all of its diverse
assets.
Shares in Thomson Reuters were
up 1 per cent in early afternoon trading at $26.65, after touching a 52-week
low. Dissatisfaction with the shares’ performance within the Thomson family,
which controls about 55 per cent of the company, is said to have been a factor
in Mr Glocer’s early departure.
Mr Smith faces the challenge of
reviving growth in Thomson Reuters’ markets division, the product of the 2008
Reuters acquisition, which has lost ground to Bloomberg and struggled with the
introduction of a central new product, Eikon.
The group has yet to disclose
the scale of the “one-time charges” it expects to report from the three
restructuring announcements made since the summer, which led to the exit of
several senior executives in Thomson Reuters Markets and the merging of the
markets and professional divisions.
Andrew Edgecliffe-Johnson
Financial Times
Business & Investment Opportunities
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