Thomson Reuters in FT Lex

The Lex column in FT today has an interesting piece of the stock price differential between the London and Toronto exchanges for Thomson Reuters.  There's almost a 20% difference between the share prices on the two markets.

"The Canadian holders of Thomson Reutersstill see it as a mostly defensive professional publisher. Strong first quarter sales figures last week supported the thesis that the combined group is resilient. About half of revenues and earnings before interest, tax and amortisation come from the less volatile professional division. And, more by chance than by design, the combined financials business has limited exposure to the worst-hit areas – fixed income accounts for just 7 per cent of combined group sales.

The view from London, meanwhile, is that the Canadians have no idea what is about to hit them. Reuters (40 per cent of combined ebita) is still seen as a hostage to the fortunes of its main customers, the investment banks. During the last downturn it was clobbered. Underlying revenues fell by almost a fifth between 2001 and 2003. Even after five long years of restructuring, ebita margins fell from 15.4 per cent in 2001 to 12 per cent in 2006. The shares troughed only when the rate of contract cancellations stabilised; that was not until the first quarter of 2003."