Blackstone is looking to acquire that all-important tool in the financial market today – big data
As far as 2018’s mega deals go, Blackstone has set the benchmark. Last week, it announced a deal to acquire a 55 per cent stake in Thomson Reuters’ Financial and Risk Unit business. The deal gives Reuters access to $17 billion in private equity that they sorely need to pay cash taxes, debt and transaction expenses. The deal values the F&R unit at $20 billion.
If you’ve been tracking Thomson Reuters, for the last decade, you might remember the 2007 deal that saw Thomson and Reuters merging together in a $17 billion agreement that made them one of the world’s largest financial news provider. The financial crisis tsunami that rocked global stock markets in 2007-2008 meant things didn’t nearly go according to plans and the merger failed to create the media monster capable of trampling over the competition.
A resurgent Bloomberg didn’t help Thomson Reuters’ cause either. Reuters’ trading terminal never quite shined as bright as Bloomberg’s trading terminal. In 2016, it was reported that Bloomberg held a 33 per cent market share in F&R, while Reuters’ was just 23 per cent. Blackstone’s acquisition of Reuter’s F&R unit has a much larger goal than to acquire desktop products marketed to bankers and traders. Instead, Blackstone is looking to acquire that all-important tool in the financial market today – data. Reuters reported that in a call with analysts after the deal was announced, Blackstone’s President Tony James, said “We’re big believers in data and that’s certainly a driver behind the Thomson Reuters business. The most valuable part of that business by far is the data part. The terminals are the legacy business for which people think of them but that’s not where the future of that company is.”
The data analytics division within the F&R unit which Blackstone has gone all in for accounted for $6 billion in sales in 2017 alone. It explains why Blackstone decided to go ahead with its biggest deal since the financial crisis.