Reuters jumps 25% as Canada's Thomson is tipped to table a bid

SHARES in Reuters soared 25 per cent yesterday after the news and financial information service became the latest takeover target.

The stock closed at 615.75p, having touched a five-year high of 649.75p, valuing the news agency at 7.8 billion, as speculation grew that it was on the verge of receiving a bid from Canadian rival Thomson Corporation.

Some traders had earlier cited Rupert Murdoch's News Corp as a possible suitor, after its $5bn (2.5bn) offer for Dow Jones - owner of the Wall Street Journal newspaper - was turned down by Dow Jones's controlling Bancroft family.

Reuters - founded in 1851 - confirmed to the stock exchange that it had received a preliminary approach from an un-named third party that "may or may not" lead to a full offer.

A spokesman for Thomson said: "I will not comment on rumours and speculation."

Any takeover offer could face considerable obstacles.

Under Reuters's unique ownership structure, a single golden share held by the Reuters Founder Share Company can block a hostile bid. The company is run by 15 trustees, charged with ensuring the "independence, impartiality, integrity and freedom from bias" of the global news organisation.

A friendly approach, however, would be possible.

Sam Hart, an analyst at Charles Stanley, said: "The restrictions of the constitution ... are by no means insurmountable and an agreed bid is possible."

In a note, analysts at Numis Securities said: "We believe the most likely bidder is Thomson, which is already a player in the financial space and, with the sale of its College Education business for $5bn well advanced, has the firepower to fund a deal." They said any bid was likely to be in the range 610p-660p a share.

Media shares on both sides of the Atlantic have surged since News Corp unveiled its $60-a-share-bid for Dow Jones on Tuesday. Dow Jones also competes with Reuters, Thomson and privately owned Bloomberg in providing breaking financial news.

Reuters was founded by German-born immigrant Paul Julius Reuter, who opened an office in the City of London that transmitted stock market quotes between the UK and Paris via the new Calais-Dover cable.

The business grew into the world's biggest news agency, but now derives the vast majority of its revenues from its financial services operation.

Traders and analysts also cited internet search engine Google, software giant Microsoft and private equity groups, possibly working with Reuters' management, as potential bidders.