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Dual-listed, twice-blessed?

Financial Times: Dual-listed, twice-blessed?

By Andrew Hill
Published: April 17 2008 03:00 | Last updated: April 17 2008 03:00

At the meeting that last month authorised the creation of Thomson Reuters, one shareholder likened the 545-page circular on the deal to War and Peace . It is worth wondering which of the two opposing destinies awaits Thomson Reuters, given the complexity of the transaction, the Thomson family’s majority stake in the combined group and the chequered history of dual-listed companies.

Thomson Reuters, trading in which gets under way today, is only the latest dual-listed entity to tax the ingenuity of legal and financial advisers. In London, BHP Billiton, Rio Tinto, Unilever, Reed Elsevier and Carnival all sport such structures. The alternative could have been worse, at least for holders of Reuters stock. Under a straight cash-and-shares takeover, they would have been forced to take Canadian paper. Symbolically, too, the dual listing offers an additional safeguard for the old Reuters values.

That’s the theory. The practice (the flow chart’s on page 61 of War and Peace , if you’re reading along at home) looks highly complicated. Thomson Reuters has at least committed itself to a single board and management (albeit one that is likely to have a carbon footprint as big as Ontario). That should save it from the fate of Royal Dutch Shell, where reforms were triggered only after a reserves crisis exposed the deficiencies of its multi-board structure.

Anomalies and arbitrage opportunities come with this territory. Tom Glocer, chief executive, pointed out yesterday that pre-deal market values implied Thomson Reuters’ London-listed shares would open at a 6 per cent discount to the Toronto stock.

Another investor last month invoked the name of Brambles, the Anglo-Australian industrial pallets group. It made similar soothing noises about the long-lasting nature of dual listings when it was formed in 2001 from a merger with GKN’s industrial services arm. It went on making them until just before its decision to move everything – lock, stock and pallet – to Sydney in 2005. The chief executive said Australia was more of a “natural home” for the group. With 53 per cent of Thomson Reuters still in the hands of the Canadian Thomsons and trading of the shares likely to centre on London, it is hard to say where the new-born media hybrid’s home is. That’s not something shareholders need worry about today. But they should keep it firmly in mind as the saga unfolds.

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Copyright The Financial Times Limited 2008

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