The potential merger between financial data provider Thomson and news service Reuters moved a step closer Tuesday, as the companies provided details for a deal worth about 8.8 billion pounds ($17.6 billion).
Thomson would pay 352.52 pence a share in cash and swap 0.16 share of Thomson shares for each share of Reutesr. Based on Monday's close, the deal values Reuters at 697 pence a share ($14), about a 13% premium from Reuters' closing price.
The offer is about 42% higher than where Reuters' shares were trading on May 3, before the company confirmed it received a preliminary bid.
Shares of Reuters rose more than 4% to 643 pence in morning London trading. The gap between Reuters' current share price and the offer price is mainly due to uncertainty about where Thomson shares head when they start trading later Tuesday in Toronto, Alex De Groot, an analyst at Panmure Gordon, told CNBC Europe.
The new company would be called Thomson-Reuters and aim to create a global leader in the business-to-business information markets. Reuters CEO Tom Glocer would be chief executive of the combined company.
Woodbridge, the Thomson family holding company, would own 53% of Thomson-Reuters, while other Thomson shareholders would hold 23% and Reuters shareholders would own 24%.