Nasdaq OMX Group Inc said on Wednesday it agreed to buy Thomson Reuters Corp's investor relations, public relations and multimedia services units for $390 million, as the exchange operator builds businesses that do not depend on trading.
The all-cash deal will add to Nasdaq's earnings within 12 months of closing, excluding transaction-related costs, the company said.
Nasdaq (NDAQ.O) is looking to sell additional services to the companies that list on its exchanges as a way to draw more revenue from its corporate customers. It already gets more than 70 percent of its revenue from businesses that do not depend on transactions.
The Thomson Reuters (TRI.TO)(TRI.N) units that Nasdaq is buying help companies communicate with investors and media and create and distribute video presentations.
Nasdaq already provides some of these services, but the acquisition will broaden its offerings and make them more global, bringing 7,000 new clients in more than 60 countries.
The units Nasdaq is acquiring generated $233 million of revenue in the 12 months ended September 30. That figure represents about 2 percent of Thomson Reuters' revenue in that period, but more than 7 percent of Nasdaq's revenue.
Nasdaq said it is funding the deal with available cash - the company had $438 million of cash and equivalents on its books at September 30 - and through its $750 million line of credit.
Nasdaq considered buying back shares but decided this deal would offer a higher return to shareholders, Chief Executive Robert Greifeld said on a conference call.
The deal is expected to close in the first half of 2013. Nasdaq has made a binding offer for the units but will not enter a definitive agreement until both companies talk to relevant unions and works councils.
Thomson Reuters has been trying to accelerate growth in the wake of the financial crisis after customers in banking and finance laid off tens of thousands of employees to cut costs.
As part of that effort, it is rejiggering assets in its portfolio.
The units the company is selling "didn't really integrate across the entire platform," said Drew McReynolds, an equity analyst covering telecom and media companies at RBC Capital Markets in Toronto.
Earlier this year, Thomson Reuters sold its healthcare business to private equity firm Veritas Capital for $1.25 billion in cash.
But Thomson Reuters is also buying assets where they help its main businesses. In July, it said it was buying foreign exchange platform FX Alliance Inc for $625 million.
Reuters is a unit of Thomson Reuters.
Bank of America Merrill Lynch and Barclays Capital advised Nasdaq on the deal. JPMorgan advised Thomson Reuters.
(Reporting by John McCrank in New York, additional reporting by Jessica Toonkel, Herbert Lash, and Jennifer Saba in New York; Editing by Alden Bentley, Dan Wilchins,Jeffrey Benkoe and John Wallace)