London and New York, March 10 2005 - BT and Reuters (RTR:LSE) today announced that BT will become Reuters supplier of network services in a contract under which Reuters is expected to spend in the region of $3 billion over eight and a half years. BT will also acquire Radianz, the leading financial services extranet provider, from Reuters for a consideration of $175m for the business plus any cash remaining on the balance sheet, net of working capital adjustments, at the date of completion.
Under the network services agreement, BT will provide and manage secure data networks for Reuters products and services world wide. This will see Reuters customers benefit from the breadth and flexibility of BTâs global portfolio of networked IT services. In addition, BTâs skills and expertise in the provision and management of highly resilient networks will enable Reuters to continue the substantial improvements to its products.
The purchase of Radianz is an important step in BTâs continuing transformation into a global provider of networked IT services. The move is a logical evolution for Radianz, strengthening its position as a neutral, shared market infrastructure provider for the financial services industry. Following the acquisition, Radianz will continue to provide high quality extranet services for Reuters and the global financial services market. The company and its customers will benefit from a broader range of integrated services in the future provided by BT.
Tom Glocer, Reuters Group chief executive, said: "The network services agreement with BT signals the start of an important relationship. It will see Reuters and its customers benefit from the range of communication services that BT and Radianz will provide to the financial services community. Along with the sale of Radianz, it also sees Reuters exiting the provision and management of data networks. This is a major contributor to our Fast Forward business transformation programme and will allow Radianz to build upon its recent successful performance. I look forward to working with BT as a partner."
Ben Verwaayen, chief executive, BT, said: "I am very excited about the possibilities that come from this relationship and believe the benefits for both companies will be significant. For Reuters, having a high-performance communications network is central to its business. The network services contract is the latest example of major enterprise customers choosing BT as their global communications partner. The acquisition of Radianz is of strategic importance as the global financial services market offers a huge opportunity to BT, and this will form the cornerstone of our approach to this sector."
This is the latest in a series of announcements by BT of major customer contract wins. It also follows the acquisitions of Albacom and Infonet. The deal announced today is the result of the news in October 2004 that BT and Reuters were in exclusive discussions about a long-term network services agreement and ownership of Radianz. The completion of the network services agreement is subject to the completion of the acquisition of Radianz by BT, which is subject to final regulatory approvals and other customary completion conditions, expected in the next three months.
The consideration for BTâs acquisition of Radianz from Reuters will be satisfied in cash at completion. Reuters intends to use the proceeds from the sale of Radianz to invest in its business and pay down debt. As a result of the transaction, future funding obligations from Reuters to Radianz of $44m will be extinguished. Radianz had reported net assets of $185m as at 31 December, 2004 and a 2004 loss before tax of $2m (Radianz results are currently unaudited).