Friday, 15 July 2016

Onex and Baring pay billions, but what will they do with the TR IP business?

Earlier this week news and information service Thomson Reuters had the chance to post some breaking news about itself, in "Thomson Reuters to sell IP & science unit for $3.55 billion".   The story, in relevant part, reads as follows:
"Thomson Reuters Corp ... on Monday said it agreed to sell its intellectual property and science business to private equity firms Onex Corp ... and Baring Private Equity Asia for $3.55 billion in cash.

The business, which has 3,200 employees, provides intellectual property and scientific information and associated tools and services to governments, universities and companies.

...   The news and data provider said in November it was exploring strategic options for the unit, which had revenue of about $1 billion in 2014.  Analysts have estimated that the business would be valued at more than $3 billion, or more than 10 times EBITDA (earnings before interest, tax, depreciation and amortization). The division contributed about 8 percent of Thomson Reuters' total revenue of $12.2 billion in 2015. Reuters had earlier reported that the company was discussing selling the units in parts to facilitate a divestiture that could raise more than $3 billion. ..."
What does this all mean?  This blog picked up a post last December by Hugh Logue (Outsell) in which the theme of "all change" in the IP analytics sector was discussed [see "Changing of the Guard as CPA, LexisNexis mop up analytics firms", here].  We turn again to Hugh now, and quote his comment on this week's deal, from his latest Insight on the topic:
"There are big opportunities to turn some of Thomson Reuters products that were originally designed for print, such Derwent World Patents Index, into data businesses that can leverage advances in artificial intelligence technology to create some revolutionary solutions, such as having machines create inventions using AI".
In all modesty we can say that Cipher is such a revolutionary solution.

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