Thomson frees cash to buy Reuters

Thomson wants to expand in the electronic information market

Canadian data provider Thomson has agreed to sell its education business for $7.75bn (£3.7bn) in cash.

Apax Partners, a private equity group, and an Ontario-based pension fund, will buy Thomson Learning and textbook provider Nelson Canada.

The sale price sailed past analysts' forecasts and will give Thomson a large cash boost to help fund its purchase British news agency Reuters.

A Reuters tie-up could cost Thomson $17.5bn in cash and shares.

Thomson shares jumped after the announcement and closed up 3.60% to stand at $42.02 at the end of New York trading.

Reuters shares advanced 1.91% on the London Stock Exchange to settle at 613p.

News market

The sale is part of Thomson's strategy to offload its higher education and library reference material division, announced last October, allowing the electronic publisher to pursue "opportunities better aligned with its growth strategy".

The deal is expected to close in the third quarter of the year and is subject to regulatory approval.

Nelson Canada will be majority-owned by the Canadian pension fund, Omers Capital Partners.

The proceeds from the sale will provide Thomson with the funds to pursue its Reuters bid, a move that would seal the firm's efforts to become a bigger player in the news and electronic information market, say analysts.

Reuters and Thomson are ranked second and third in the market for data terminals, providing stockbrokers and traders with the most up-to-date information on stocks, bonds and currencies.

Reuters said this week that both it and Thomson "believe there is a powerful and compelling logic for the combination which would create a global leader in the business-to-business information markets".

But both firms stressed talks were at an early stage and there was no certainty a formal bid would be tabled.