Reuters Plans $799 Million Net Makeover

SAN FRANCISCO (02/09/2000) - Reuters Group PLC Tuesday unveiled its long-awaited plans to move the company to an Internet-based business model, saying it would invest $799 million over four years to significantly expand its online and wireless ventures in the U.S. and Europe. It might also take public two separate business units with strong Internet plays.

"The Internet has opened up two big opportunities for Reuters. It has enabled us for the first time to start serving an infinitely wider market, including individuals making financial decisions at home and at work," said CEO Peter Job in a statement. "It has also allowed us to adopt a more cost-effective model for our base business."

To raise money for new projects, Reuters is preparing to publicly offer stock in two of its businesses. The company said it had begun preparing to sell shares of its Greenhouse Fund, which has invested more than $130 million since 1995 in Web portals like Yahoo and Infoseek, as well as in technology firms whose products help other firms engage in e-commerce. Today, the fund's investments in public companies are valued at more than $700 million, said Reuters Americas spokesman Bob Crooke.

Reuters also said Tuesday it is "actively considering" going public with Instinet, an electronic service that facilitates trading between buyers and sellers of equities and securities.

Although Reuters is one of the premier providers of news and information in the U.S., it has not made strong forays into the Internet up to this point. Reuters analyst Neil Carter of ABN Amro says the stock market held the company back until only recently.

"If they had done this a year ago, they would have been very heavily punished," he said. "The market is ready to say, 'We don't really give a shit about earnings over the next three or four years.'" Expanding on its joint venture with Aether in the U.S., Reuters will team up with the company to provide news and financial data to PalmPilot users in Europe. Aether will contribute $100 million in cash and own 60 percent of the company, and Reuters will contribute $22 million in cash and assets and own 40 percent.

Reuters also announced a joint venture with Multex to create a Web site that will foster a community of investors in Europe. Reuters has a "small investment" in Multex, Crooke said, and is investing $30 million in the new business with the company.

To target the consumer market, Reuters will create a financial portal. The company announced two joint ventures to deliver new services to private investors in Europe. Reuters also announced plans to create a new financial portal to serve the consumer finance market.

Last week, Reuters announced a joint venture with Equant to create a closed, business-information extranet made up of 60,000 affiliated Web sites that can link up paying business users for e-commerce opportunities. The extranet will be marketed to information providers and customers. The new enterprise will also provide network technology solutions.

Reuters will own 51 percent of the venture and will transfer $130 million in existing telecommunication assets to the new venture. It will also contribute 400 staff members and $25 million. Equant will own 49 percent of the company and contribute 100 staff members and $230 million in cash. Equant will also provide $125 million in network and telecommunications services, and has committed to deliver $25 million in business from Equant's existing clients.

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