Onex and Baring Private Equity Asia, a Canadian buyout group are acquiring Thomson Reuters’ specialist science and intellectual property division in an all-cash deal worth $3.55bn. The private equity group aims to seek steady subscription cash flows and more exposure to knowledge-hungry economies in Asia while Thomson Reuters chose to narrow its focus to its core financial business.
Thomson Reuters announced in November last year that it would be splitting off and selling its IP and science divisions as part of a “sharpening of its strategic focus”. With its portfolio including brands such as MarkMonitor, Web of Science, Thomson CompuMark and Thomson Innovation, Thomson Reuters’ IP and science business used to provide its subscribers with intellectual property, scientific information and other tools.
In recent years, specialist business publishers and data companies have been the subjects of big transactions as private equity groups seek stable revenues and profits in increasingly unstable markets.
Jean Eric Salata, Baring Asia chief executive, said: “We believe the outlook for the business is underpinned by an increasing shift towards more knowledge-driven economies and a continued emphasis on research and development.”
The business accounted for just 8 per cent of its total revenues in 2014 and, under chief executive Jim Smith, the global information company has been looking to prioritise its three principal divisions which provide information and data to the financial and risk, legal and accounting industries.
Analysts have said that the purchase of the news and data provider’s IP and science business was also part of a wider push into China and Asia, where there has been a big spike in the levels of investment in scientific research.
“These types of businesses are good investments for private equity groups,” said Sarah Simon, an analyst at Berenberg. “They have very high margins and have very stable subscription revenues, which means you can borrow a lot more to finance the transaction.This sort of deal just wouldn’t be possible in a public market, as shareholders wouldn’t be comfortable with the debt levels.”