Financial news and information provider Thomson Reuters Corp. (TRI,TRI.TO: Quote, RUT.L) said Monday that it has agreed to sell its healthcare business to private equity firm Veritas Capital for $1.25 billion in cash. The sale, subject to regulatory approval, is expected to close in the next few months.
The healthcare business provides data, analytics and other services to hospitals, government agencies and healthcare professionals to help them identify savings, improve efficiency and fight fraud and abuse. The business generated revenues of about $450 million in 2010, or 3 percent of Thomson Reuters' total revenue.
Commenting on the deal, James Smith, chief executive officer of Thomson Reuters said, "With the completion of the divestiture, Thomson Reuters will be even more focused on our core global businesses."
Thomson Reuters in June 2011 had announced plans to divest its healthcare business after deciding that the unit lacked the scale of its competitors. The company intended to use the proceeds from the sale to bolster its businesses serving the legal and financial industries.
However, in December, Thomson Reuters suspended the divestiture process, stating that the global economic conditions made it tough to get a fair price for the business. The company said it would invest in the business until conditions improved. But reports in mid-March indicated that the company resumed the auction of the healthcare unit.
Morgan Stanley and Allen & Co. are acting as financial advisors to Thomson Reuters for the proposed divestiture, while Covington & Burling LLP is acting as its legal counsel.
New York-based Veritas Capital has obtained debt financing commitments for the transaction, which is not subject to any financing condition.
Founded in 1992, Veritas Capital invests in companies that provide critical products and services to government and commercial customers worldwide. Since its founding, the private equity firm has been involved as the lead investor in transactions totaling more than $14 billion in value.
In December, Thomson Reuters reported a loss for the fourth quarter due to a goodwill impairment charge. At that time, the company announced its intention to sell three businesses, viz. Tax & Accounting's Property Tax Services, Legal's Law School Publishing business, and Financial & Risk's eXimius business - part of the Retail Wealth Management organization. The three businesses collectively generated about $155 million of revenues in 2011.
Also in December, Thomson Reuters named James Smith as chief executive officer of Thomson Reuters and Reuters Group plc, succeeding Thomas Glocer. The company said the move was part of a new organization structure and leadership it planned to adopt as of January 1, 2012.
Thomson Reuters also announced a new organizational structure at that time, consisting of five business units - Financial & Risk, Legal, Intellectual Property & Science, Tax & Accounting and Global Growth Organization.
In Monday's session, TRI is trading at $28.37, down $0.51 or 1.77 percent on a volume of 68,313 shares.
by RTT Staff Writer
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