Tom Glocer, Reuters CEO, said: "Telerate represents an important strategic move for Reuters. Telerateâs large US customer base and benchmark content provide an excellent platform from which to grow Reuters recently launched fixed income trading service and complement Reuters existing information offerings. We welcome Telerate customers and look forward to bringing the financial markets an even more robust product set."
With more than 3,500 customers and over 30,000 user accesses in 80 countries and territories around the world, Telerate extends Reuters presence among core financial customers, particularly fixed income and buy-side firms which represent key growth areas for the company. The Telerate benchmark content and customer base complement Reuters Trading for Fixed Income, which in the three months since launch has customers across Europe actively trading with leading price makers. Other key assets include:
Telerate benchmark reference pages covering key data such as US Treasuries and agencies, mortgage-backed securities, international government and corporate bonds.
Exclusive content such as BrokerTec US Treasury data
Extension in key geographic areas â in particular North America, representing 50% of the fixed income market, and Japan, which accounts for approximately 20% of Telerate revenues.
In addition, Reuters has signed a new agreement with ICAP to replace and significantly extend both Telerateâs and Reuters previous agreements. It maintains Telerateâs exclusive distribution arrangement for the BrokerTec US Treasury pricing and swaps data found in Telerateâs benchmark pages, which will be extended to Reuters users. The arrangement also includes new data sets that ICAP has previously not made available to either company including information relating to energy, commodities, credit, fixed income and interest rates.
The total purchase price for Telerate was $145 million (Â£79 M) in cash and Reuters 14% holding in SAVVIS, Inc. The cash purchase price comprised the $100 million initial purchase price, a $21 million working capital adjustment and a $24 million increase for pre-close actions by Telerate which have reduced Reuters anticipated restructuring costs.
Reuters has also completed the acquisition of Quick Moneyline Telerate (QMT), Telerateâs distributor in Japan. The QMT purchase price paid to Quick Corporation had an agreed value of JPY1.9 billion (Â£10 M), subject to certain adjustments, made up of JPY1.1 billion (Â£6 M) in cash and Reuters 4.85% holding in Quick.
According to Moneyline Telerate accounts under US GAAP, Telerateâs 2004 gross revenue was $274 million (Â£143 M), with an operating loss of $42 million (Â£22 M) before depreciation and amortization. For 2003, Telerate gross revenue was $292 million (Â£152 M), with an operating loss of $87 million (Â£45 M).
Integration of the acquisition is expected to take 18 months and related integration costs are now expected to be around $58 million (Â£32 M), lower than the original estimate of $82 million as a result of restructuring actions Telerate took prior to completion. Reuters currently expects to charge approximately half of the restructuring costs in 2005. The acquisition is expected to be dilutive to Reuters adjusted EPS until completion of integration, at which point Reuters expects Telerate to become accretive to Reuters adjusted EPS and operating margins.
An integration team consisting of staff from both organisations is committed to ensuring continuity of service and support for Telerate customers. This team will determine, from a customer perspective, the best functionality and features to be developed from Reuters and Telerate products.