Thomson has struck a deal to acquire electronic fixed income network TradeWeb for an initial $385 million in cash plus a three-year earn out of $150 million.
The transaction, which is expected to close later this quarter, had been widely trailed. It pits Thomson into direct competition with Bloomberg, the market leader in fixed income information delivery.
TradeWeb, which is owned by a consortium of eight leading investment banks, is one of the few success stories in the competitive electronic fixed income marketplace. More than $43 trillion in bond trades have been executed over the TradeWeb network since its inception in 1998.
The deal with Thomson coincides with the release of first quarter trading figures which show that institutional investors traded a record $5.4 trillion in fixed-income securities over the platform, up 42% from the same period last year and a 15% increase on the fourth quarter of 2003.
Thomson plans to integrate TradeWeb with its One Yield analytical package, offering dealers and buy-side traders an electronic trading solution, from pre-trade analytics to post-trade confirmation.
Today, approximately three-quarters of fixed-income trading is done through offline trade execution. Market research company Celent estimates that by 2007 almost 60% of fixed income trading will take place electronically.
Sharon Rowlands, president and chief operating officer of Thomson Financial says: "TradeWeb's fixed-income expertise, established market position and trade execution capabilities, combined with our content and analytical tools, will enable us to extend and accelerate our penetration and reach in the growing institutional fixed-income market."