Reuters to cut Tibco links
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Reuters is to reduce its 39% stake in Tibco and give up the rights to sell its software to certain financial sector clients.
22 September 2003 Reuters, the real time financial news service, is to slash its 39% stake in enterprise integration software vendor Tibco.
At the same time, the two companies are expected to rip up a decade-long agreement that gives Reuter's exclusive rights to sell Tibco's integration software to certain key customers in the financial sector.
The move follows discussions between the two companies over the past several months. Reuters, which has been losing market share to rival Bloomberg in its core information services markets, is in the middle of a cost cutting programme.
The sale of part of the stake, which is worth about $470 million, will form a key part of the financial restructuring.
However, Tibco has also been pressing Reuters to reduce its holding, arguing that the lack of liquidity has frustrated some investors and reduced its influence on Wall Street. At the same time, the move may equally rebound on Tibco. With the shares in more hands, the stock price may be more volatile and an unwanted takeover approach will be more likely.
Tibco also believes that, if it can deal with Reuters customers directly, it will be able to sell more software.
The timing of the sale is good for Reuters. Tibco's shares have risen by just under a fifth in 2003 and the company recently returned to revenue growth and profitability after a dismal 2002. Some analysts have forecast the growing pressure on the enterprise integration software sector will eventually force Tibco and some of its rivals to merge.
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