Reuters has agreed to cut its stake in business integration software subsidiary Tibco and loosen its strictures on direct sales to financial services companies.
In a statement, Reuters says it intends to reduce its 49% Tibco stake in an "orderly and efficient manner". Under the agreement, Tibco has agreed to repurchase a portion of its shares from Reuters under a public offering, with the timing of the sale determined by market conditions.
Reuters says that if it sold at least $100 million of its $600 million stake within 12 months of a US public-offer filing, Tibco has agreed to buy back an equal number of shares at the same price per share, up to a maximum of $115 million.
Tom Glocer, Reuters CEO says: "Tibco has agreed to make a portion of its cash available to assist an orderly sale of Reuters stake."
While the deal gives Tibco new commercial freedom to sell direct to the financial services market, Reuters' has maintained its restrictions on the sale of risk management and market data applications.
Vivek Ranadivé, CEO of Tibco, said: "Tibco will now have the ability to fully capitalise on our brand strength in financial services. We look forward to expanding the use of Tibco technology with both new and existing customers in financial services."
Reuters says it will continue to use Tibco technology internally and embedded within its products, but will phase out its role as a general reseller over the next 18 months. The two firms say they will work together to ensure a smooth migration of maintenance contracts to Tibco.
Until its reseller rights are phased out in March 2005, Reuters will continue to make quarterly payments of $5 million to Tibco. The quarterly payment is subject to reduction during phase-out based on Tibco's direct revenues from products and support sold to financial services customers.