Thomson Reuters: Selling at Peak Value?
July 12, 2016
I read “Thomson Reuters Announces Definitive Agreement to Sell its Intellectual Property & Science Business to Onex and Baring Asia for $3.55 billion.” Thomson Reuters has been working hard to pump up revenue and generate a juicy profit for its stakeholders. Like IBM, it seems that the best way to get a large, established company in gear is to sell assets. According to the write up, Thomson Reuters’ management thinks:
“With the completion of this divestiture, Thomson Reuters will be even more focused on operating at the intersection of global commerce and regulation.”
What’s next for Thomson Reuters? More video? More Palantir repackaging? Higher fees for its professional information services?
Thomson Reuters has tried many things in the last two decades. The result is suggested in this chart:
The top line has been drifting down. The profit margin (the all important red line) has been a roller coaster. The net income has been a result of management moves and cost controls.
The question is: Is this collection of patent and IP related properties at peak value?
My hunch is that Thomson Reuters found the deal palatable. What will the new owners do with the properties. Both are investment outfits. The trajectory of these “services” like Compumark will be interesting to follow.
For Thomson Reuters, the hurdle remains growth. Isn’t that a problem with which IBM is struggling? Running specialist businesses with those who are not experts in each niche has been a challenge for many firms. Now the new owners Onex Partners and Baring Private Equity Asia have an opportunity to display their management expertise.
Selling is easier than innovating. Managing a bundle of businesses may be even more difficult.
Stephen E Arnold, July 12, 2016
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