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Thomson to Acquire NewsEdge
by
Posted On August 13, 2001
n yet another strong sign of consolidation in the information industry, Thomson Corp. (http://www.thomson.com) announced that it has signed a definitive agreement to acquire the NewsEdge Corp. (http://www.newsedge.com) for approximately $43 million. NewsEdge will operate as a stand-alone business and will be "aligned" with Dialog (http://www.dialog.com) as part of the Thomson Legal & Regulatory group (http://www.tlrg.com).

Under the terms of the agreement, a newly formed Thomson subsidiary (comprising the Legal & Regulatory group) will make a cash tender offer for all of the shares of NewsEdge common stock, at a price of $2.30 per share. NewsEdge, which trades on the NASDAQ as NEWZ, closed at just $1.20 the day before the announcement. The closing of the offer, which is expected to be completed during the second half of this year, is subject to shareholder approval and the customary closing conditions.

NewsEdge will continue under its current management team, headed by president and CEO Clifford Pollan. The headquarters will remain in Burlington, Massachusetts, and no staff reductions should occur. Pollan will report to Dialog president and CEO Roy M. Martin Jr. David Scott, NewsEdge's vice president of marketing, said the only change would likely be that field-based sales offices for Dialog and NewsEdge would be consolidated. The companies expect that as their integration strategy is developed and implemented during the next 6 months and strengths and synergies are determined, they would anticipate joint offerings or cross-selling of NewsEdge, Dialog, and other Thomson company product lines by both sales organizations.

The sale of NewsEdge doesn't come as a surprise—industry observers have speculated that the company was ripe for a takeover and have just been waiting to hear who the buyer is. Back in December 1999, NewsEdge announced it was being acquired by RoweCom, but by March 2000, the deal was off, reportedly due to sharp declines in stock prices of both companies, NewsEdge shareholder opposition, and company-integration issues. At that time, Don McLagan resigned as chairman and CEO of NewsEdge, and Pollan, then president and chief operating officer, became president and CEO. Pollan then led the company during the recent rocky economic times, struggled with its sagging stock price, and has seen the company through several strategic realignments and moves into new markets.

Pollan said that it made sense for NewsEdge to partner with a larger company, and that it had been approached by several of them. He felt that NewsEdge would now be in a much better position to be responsive to the needs of customers. In fact, he said that some of its larger corporate customers had been worried that NewsEdge was too small and not financially stable enough for them to rely on for services.

NewsEdge will certainly stand to gain from the financial backing of its deep-pocketed parent, as well as from the potential synergies with other Thomson units. Pollan said: "Today's announcement signals a new future for NewsEdge, giving us new resources and an even stronger presence in the corporate enterprise market.  By leveraging the strength, technology, and reputation of The Thomson Corp. across our lines of business, we can deliver even greater value to our customers, our partners, and our employees."

Pollan stressed how the live news and current awareness from NewsEdge would complement other Thomson information resources. He noted that information provided by NewsEdge often leads to a search for additional archival and research information, which would be ideally supplied by services like Dialog and West.

It also comes as no surprise to industry observers that Thomson has stepped up as the buyer for NewsEdge. The Toronto-based company has been on a veritable buying binge in the information industry. Thomson purchased both Primark, the financial information services company, and Dialog in 2000, as well as many smaller companies. Recently it bought a chunk of the Harcourt businesses from Reed Elsevier. And don't forget that it also purchased West Publishing in 1996, IAC in 1994, ISI in 1992, etc. The Thomson Corp. is huge, with 2000 revenues of approximately $6 billion. The Legal & Regulatory division alone has 17,000 employees and $2.6 billion in 2000 revenues. In contrast, NewsEdge revenues for 2000 were $71 million.

In fact, many searchers are expressing concern with the seemingly endless consolidation in the industry. Some are asking, "Will Thomson eventually own everything?" Richard Poynder's April 30 NewsBreak stated, "The Debate Heats Up—Are Reed Elsevier and Thomson Corp. Monopolists?" (http://newsbreaks.infotoday.com/nbReader.asp?ArticleId=17604). The Harcourt deal even raised questions about collusion between two competitors to purchase and carve up the markets.

From Thomson's viewpoint, it should gain from leveraging the strengths of NewsEdge: its proprietary technology and specialized editorial processes that deliver decision-support solutions to organizations. NewsEdge also brings a valuable current-awareness component to the depth and breadth of the Dialog databases and other Thomson content. NewsEdge provides real-time news and information products and services to approximately 1,500 corporations and professional service firms. NewsEdge has three major lines of business: information and decision-support services, content solutions, and electronic publishing technologies. Its customers include enterprise sites, portals, publisher Web sites, and distribution channels. In addition, NewsEdge delivers services to large numbers of knowledge workers' desktops, which will broaden the reach of Dialog's traditional market within the professional information marketplace.

"The acquisition of NewsEdge builds on the commitment of The Thomson Corp. to provide broad and powerful information and tools to the business and professional market," said Brian H. Hall, president and CEO of Thomson Legal & Regulatory.  "Like Westlaw, Dialog, and other Thomson products, NewsEdge offers timeliness, breadth of coverage, and editorial excellence.  It also provides an important complement to our news and current-awareness services, and enhances our position in the business news and corporate market segments."

Martin talked enthusiastically about the acquisition. He too stressed the synergies between NewsEdge and the Thomson information products and was particularly impressed with the strengths of the NewsEdge technologies. He said that the NewsEdge taxonomy and its XML conversion would be key assets for his company. While it expects to make connections and links among its service offerings in the near term—such as NewsEdge customers linking to Dialog's archival information and vice versa—long term it hopes to develop new and innovative information products.

Martin added that NewsEdge has a wonderful management team and an excellent customer base. In return, he noted that Thomson is a well-run business that will offer more resources and opportunities to NewsEdge. Martin feels that the acquisition will be good for customers who should benefit from new and better products and enhanced competition in the information marketplace. He said, "The Dialog/NewsEdge combination will raise the bar for some of our competitors."


Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.


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