Thomsons go back to news roots with sale of unit to Blackstone

The deal with Blackstone will give the Toronto-based company a financial jolt

By Norm Betts
23:04 February 1, 2018

David Thomson, the third-generation scion of Canada’s richest family, is retreating to his news roots with the sale of his company’s financial data business to Blackstone Group.

Thomson, whose grandfather Roy launched the media empire with a tiny radio station in 1931, agreed on Tuesday to sell a 55 per cent stake in the division to Blackstone, valuing the business at $20 billion. Following a difficult decade that’s traced the ups and down of global finance, as well as upheaval in traditional media, Thomson is tearing apart the merger of Thomson Corp and Reuters Group that he orchestrated only a decade ago.

“This is a watershed moment in the history of the company,” Douglas Taylor, managing partner of Burton-Taylor International Consulting, said by phone. “For several years I thought we would one day see the family selling the financial data business. Since the acquisition of Reuters there’s been a high level of discomfort.”

For the Thomsons, whose family holding company controls Toronto-based Thomson Reuters Corp, the deal will allow them to keep some revenue from the slower-growing financial-data business, while maintaining the legal and accounting units and the Reuters newswire, heir to the service that transmitted stock prices across the English Channel in the 1800s.

News has always been near and dear to the three generations of the Thomson family even as they built up legal, education and financial-data businesses and amassed one of the largest collections of Canadian paintings as their fortunes grew.

Roy Thomson started the family business — which has helped his descendants amass a combined fortune of about $22 billion — with the purchase of a radio station in North Bay, Ontario, 87 years ago. Roy, a Depression-era radio salesman, figured it would be easier to sell his equipment if there were more stations.

A few years later, he bought a newspaper in nearby Timmins, the start of what would be an empire of 200 newspapers stretching across North America and Britain, including The Times, once considered the crown jewel of British broadsheets. That earned him -and then his son Ken Thomson — the title of Lord Thomson of Fleet.

Ken’s son David Thomson, 60, took the reins of Woodbridge Co., the family holding company, after Ken died at his office on David’s birthday in 2006. Not long after, he made the biggest deal in the company’s history, buying Reuters for $17 billion and adding the global newswire to his financial data business.

“I would like to say that my late father was more than familiar with this dream,” David Thomson said at the time. “He believed it was all about opportunity; it was all about possibility.”

Thomson Reuters has struggled since the deal, with the stock falling during the financial crisis, and recovering at a slower rate than the broader US equity market since then.

The stock rose 7.1 per cent to $46.52 at the close in New York, the biggest gain in more than eight years, giving it a market value of about $33 billion. Woodbridge controls Thomson Reuters with a 64 per cent stake, according to data compiled by Bloomberg.

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, is a non-executive director at Blackstone.

The deal with Blackstone will give the Toronto-based company a financial jolt, according to Drew McReynolds, an analyst at RBC Capital Markets.

“The transaction would provide Thomson Reuters with substantial financial flexibility to return capital to shareholders while investing in higher-growth opportunities, including potentially pursuing additional acquisitions in higher-growth market segments,” he said in a note Tuesday.

If the deal is completed, Thomson will continue to run the newswire, along with the tax and legal arms, while selling a 55 per cent stake in the financial data unit to New York-based Blackstone. The deal values the data unit at about $20 billion including debt, according to people with knowledge of the matter. Blackstone agreed to make annual $325 million payments over 30 years for Reuters news content, the newswire reported.

Woodbridge didn’t respond to requests for comment.

Roy’s son Ken assumed control of the family business in 1976 when his father died. Ken extended the media holdings, which include the Globe and Mail, Canada’s national newspaper, by adding book publishing, legal and scientific businesses. The purchases included the West Law legal business for $3.4 billion.

While he amassed assets, Ken wasn’t afraid to unload businesses when he saw fit. His first decision was to sell the two British newspapers, which were beset with union problems, to Rupert Murdoch and retreat to Canada, author Peter C. Newman said in a 1991 profile.

Along the way, Ken Thomson developed a love of art, a legacy carried on by his children, including David, current chairman of Thomson Reuters. Ken was an avid collector of works by Cornelius Krieghoff, who painted scenes of Canadian rural life in the 19th century. He also collected landscapes of the “Group of Seven” Canadian painters, whose members included A.Y. Jackson and Lawren Harris. Thomson agreed to donate most of his collection of more than 2,000 pieces of Canadian and European art to the Art Gallery of Ontario in Toronto, including Peter Paul Rubens’ masterpiece “The Massacre of the Innocents.”

Even with his vast wealth, Ken famously shunned the limelight and was known to watch every penny.

Jim Pattison, a Canadian billionaire who sat on boards with Thomson, recalls seeing him trudging through the snow across a parking lot on his way to a dinner in Toronto. Thomson had parked his car a few blocks away from the event to avoid paying for valet service.

“I’m a poor church mouse compared to him and here he’s walking a block or two to save the money, I always remember that,” Pattison said following Ken Thomson’s death. “He was always very frugal with his money.”

While David is not the hands-on business leader his father was, he maintains an emotional attachment to the news business, notably his father’s Globe and Mail newspaper in Canada.

“The Globe and Mail is particularly meaningful to us as a family,” Ken Thomson told Bloomberg News in a 2004 interview following the annual meeting of Thomson Corp in Toronto. “We’re not going to let anything happen to the Globe and Mail.”

More recently, David choked up in a rare speech in Toronto at the Canadian Journalism Foundation gala in 2016, vowing to back the paper even as print circulation falls and newspapers struggle around the world amid a digital shift.

“We will always support the Globe,” he said.