On June 11, Thomson Corp. was listed on the New York Stock Exchange (NYSE), one of the largest companies added to that market this year. The lead underwriters were Merrill Lynch & Co. and Morgan Stanley. In making the decision, Thomson originally intended to raise $1.5 billion, with shares listed on the Toronto Stock Exchange (TSE). The company anticipated raising $500 million from issuing new shares and an additional $1 billion from selling shares held by Woodbridge, Inc., the Thomson family's holding company. Hopes were high as Richard Harrington and Ken Thomson rang the bell for the opening of the NYSE that Tuesday. The reality was slightly disappointing (although the company puts a good face on it), with Harrington citing a "volatile market."
The 32 million shares offered represented 14.6 million new shares plus 17.4 million existing shares from the Thomson family holdings through Woodbridge. Priced at $31.20 at the beginning of the opening day, by the end of the day the price of shares had dropped slightly to $30.98. First reports of the NYSE listing had the number of shares pegged at 38 million; this was later reduced to 32 million. Given the soft market, Thomson opted to reduce the offering by 16 percent. The reduction came in the shares owned by Woodbridge rather than new shares. Still, the company and the family ended up pocketing $1 billion—hardly chump change. The official word from Thomson is that the money will be used to pay down debt and for general corporate purposes. According to a company spokesman, it was appropriate for Thomson to be on the largest capital market in the world.
Thomson intends to continue its Toronto Stock Exchange listing, but canceled its listing on the London Stock Exchange (LSE), where it had two thinly traded listings, a vestige of its past presence as an owner of British newspapers. Both were redeemed on June 17 in conjunction with the NYSE launch.
The NYSE listing is not an IPO, although it's surprising how many assumed that was the case. Even The Daily Deal's Laura King mistakenly referred to it as an IPO, as did analyst Jake Balzer of Edward Jones and Co. Over at CBS MarketWatch, Steve Gelbie noted, "It's about as close as a company can get" to an IPO, but there was no necessity for an S-1 filing with the U.S. Securities and Exchange Commission.
If financial commentators are confused about whether or not Thomson's NYSE listing is an IPO or not, can Thomson customers be excused for not getting the picture either? I was amazed at the number of Thomson customers I talked with who honestly didn't know the company traded on any exchange. They thought it was a private family-owned business. Factor Woodbridge into the equation and the customers aren't that far off. After Thomson's listing on the NYSE, Woodbridge's ownership had dropped to "only" 67 percent of the company vs. the 73 percent it owned prior to the offering. In my book, that's still majority ownership.
Some of the confusion may derive from the fact that Thomson has primarily traded as a Canadian company, although it reports its financials in U.S. dollars and has headquarters both in Toronto and Stamford, Connecticut. Having its shares traded on the Toronto Exchange gave it few bragging rights. To be on many investors' radar screens, companies need to be listed in the U.S. The move also adds to the liquidity of company shares and makes it easier for individual investors to buy stock.
According to Mark Capaldini, MCG Capital Corp.'s managing director focused on information services, Thomson's listing on the NYSE can potentially give the company a higher valuation as well. Greater visibility is another factor. In the past, Thomson companies did not flaunt the Thomson banner. Today, they display similar logos, include the word Thomson on their Web sites and marketing literature, cluster together on exhibit floors, and show a formerly inconceivable cohesiveness and willingness to collaborate.
The normal reason for floating new shares is to raise capital for a specific endeavor, frequently when acquiring another company. In the case of Thomson, the most-speculated acquisition target is Bloomberg. According to everyone at Thomson, that is not the purpose of this particular offering. Interestingly, only a week after the cash entered Thomson's coffers, the company announced the purchase of select courseware, technology, and e-learning assets from McGraw-Hill's Lifetime Learning division. However, this appears to be a fluke of timing. The deal, rumored to be worth well under $25 million, just happened to close hot on the heels of the NYSE offering. It does have strategic importance in that it underscores the emphasis being placed by Thomson on its Enterprise Learning unit.
Capaldini raises a larger, more philosophical issue. "Having a company as large as Thomson list on the New York Stock Exchange could help define the entire industry. How many people know what the information content or the information services industry is? Can we ourselves even define it?" He has a point. Outside the narrow confines of those in the library and information arena, the notion of an information industry is nonexistent. Electronically available information means the Internet, not companies like Reed Elsevier, Factiva, and Thomson. Companies that produce bibliographic databases are even more obscure. With any luck, having the Thomson Corp. trade publicly in the U.S. on the prestigious New York Stock Exchange will bring what some estimate as a $100 billion industry to the attention of the general public, lending credibility and validity to us, not to mention allowing for economic growth in the information sector.