The Wall Street Journal has been reassessing (yep — sub. still reqd.) the £8.7bn price tag attached to Reuters by Thomson back in May. If all goes according to plan, the deal to create Thomson-Reuters Corp will be finalized during Q1 of next year.
The price tag was big enough at the time. Thomson’s offer of £7.05 was 43% above Reuters’ then-share price. The price-earnings ratio applied was eye-wateringly high at 30.
Now it looks positively gargantuan. Reuters’ share price is currently £5.94, but without the prospect of a deal, it might be close to £4.
Buying Reuters will massively increase Thomson’s exposure to the financial markets — at the worst possible time. Redundancies are a certainty.
The Thomson-Reuters combination was already scheduled to produce $500m-worth of “synergies” on an annual basis. In the wake of the credit crunch, you can rely on that figure rising.