The UK Competition and Markets Authority (CMA)'s final rejection was like the sword of Damocles that had long hung over this acquisition, finally falling.
Following this news, upon learning that the merger between Thomson Group and Reuters Group was hopeless, Thomson Group's share price plummeted again, dropping nearly 10% that day!
Now, Thomson Group faced the challenge of accepting this outcome and stabilizing its share price...
But before they could do so, a wave of capital had already begun to enter the market, quietly absorbing the shares being sold.
As a result, the decline in Thomson Group's share price gradually eased, and even rebounded somewhat, eventually returning to around $35, stabilizing after its wild fluctuations.
This price represented a drop of over 25% from Thomson Group's peak in early October.
Undoubtedly, this capital, acting as a front-runner in Thomson Group's stock price protection, came from the IE Fund.
They had previously engaged in a massive short-selling operation against Thomson Group, borrowing a large number of shares from the market. Now that the operation was nearing completion, they needed to buy back the shares at a low price and return them to their brokers.
This short-selling operation cost IE Fund approximately $1 billion in capital, but after final analysis, their profit exceeded $200 million.
This may not seem like much, but the main reason was that, despite the overall market being generally downward, in order to cause Thomson Group's stock to fall more sharply, IE Fund often had to act as a bellwether, selling large quantities of shares to break through certain pressured price levels. Furthermore, this involved "support" funds from the Thomson family and Thomson Group. The friction costs of this tussling and back-and-forth trading were considerable.
Nevertheless, at least thanks to the broader trend, they were able to profit and successfully close their positions, rather than being forced into a short position and incurring losses after Thomson Group's larger capital entered the market. This was a positive outcome.
More importantly, this short-selling operation has trained the IE Fund team in Hong Kong. While they have conducted similar operations before, they had never handled such a large amount of capital.
After this, the IE Fund can use its existing capital of over $1.2 billion to join the short-selling of the entire market.
Without the specific task of taking the lead, as in the short-selling of Thomson Group, their profits will also be improved.
...
Just after the UK Competition and Markets Authority (CMA) first rejected Thomson Group's acquisition of Reuters Group, the relevant US authorities also rejected the acquisition the next day, on November 1st, ruling that Thomson Group's acquisition of Reuters Group would violate relevant antitrust regulations.
With a merger with Thomson Group out of the question, Reuters Group has only one option left: SEM Group.
It's not that they can't give up the acquisition and continue to develop independently.
However, the Reuters board also understood that the reason Reuters' stock price had fallen much less than Thomson's after the antitrust authorities rejected its acquisition was largely due to the fact that, while the merger's failure had dampened market optimism, the market still understood that Reuters still had the option of SEM.
While SEM's acquisition wouldn't offer the same synergies and future scale as Thomson, it was still a wise choice. After all, SEM's market capitalization, while similar to Reuters', was far smaller than Thomson's, but its backer, DS Group, was still very powerful.
If Reuters had rejected SEM again, it would undoubtedly have punctured the market's remaining optimism, causing a panic drop in Reuters' stock price. In the current economic climate, this was definitely not a wise choice. Regardless of whether Reuters was sold to Thomson or SEM, once they accepted the acquisition, the shareholders on the board were primarily concerned with getting the best possible price for their Reuters shares, not the company's future or its "five core principles"—those were the concerns of Reuters Founders AG. They had
previously supported Thomson's acquisition proposal because, in addition to the cash, they believed the combined Thomson-Reuters stock would be more valuable in exchange for shares in the new company.
Therefore, after Thomson's acquisition of Reuters became impossible, they were willing to agree to a takeover if SEM offered a satisfactory price.
It was under these circumstances that Reuters began negotiations with SEM regarding the acquisition. Initial contact had taken place in May of this year, and after Thomson intervened, the two sides once again engaged in substantive acquisition negotiations.
Prior to this round of negotiations between Reuters and SEM Group...
On October 31st, the UK Treasury, the Bank of England, and the Financial Services Authority (FSA) announced the final proposal from a consortium of institutions and consortiums interested in acquiring Northern Rock Bank, selecting the proposal from Standard Chartered Bank and DS Group.
This meant that Standard Chartered could now commence its acquisition of Northern Rock Bank.
According to the proposal submitted by Standard Chartered, they would acquire 100% of Northern Rock Bank, whose market value had fallen to less than 300 million pounds, for a total price of 500 million pounds, completing the privatization of the bank.
Furthermore, Standard Chartered promised that within one month of the acquisition, their consortium would repay the Bank of England the 25 billion pounds of loans and interest they had previously invested in Northern Rock Bank.
It could be said that Standard Chartered's promise to immediately repay the full £25 billion plus interest was what secured the British government's approval amidst competition from over a dozen companies and consortiums, including Virgin Group, a consortium led by Olivant, and Paul Thompson. This promise allowed the government to immediately withdraw from the Northern Rock Bank incident, preventing any subsequent negative consequences.
As for their proposed £500 million acquisition of all of Northern Rock's shares and privatization...
The Northern Rock Bank board was actually somewhat dissatisfied with the price. Although the bank's market capitalization was less than £300 million based on its current share price, the board believed that the current share price completely undervalued the bank's current value and was significantly undervalued due to the impact of the previous bank run.
The Hall family, Northern Rock's major shareholder, was particularly dissatisfied with this.
But there was no way. The British government was very tough on this. Chancellor of the Exchequer Darling once directly declared to the board of directors of Northern Rock Bank:
"You only have two choices, one is to accept the acquisition, and the other is to nationalize the bank, unless you can immediately return the country's 25 billion loans and interest. We will not allow bank owners who have endangered the entire country's financial order to escape punishment after being rescued. The investigation into this incident is still not over!"
His meaning was very clear. The board of directors of Northern Rock Bank would certainly not be able to return the 25 billion pounds of loans and interest. So whether the bank was acquired or nationalized, their ending would be the same.
On the contrary, if they are acquired, they can get some money back. If the bank is nationalized, the government will strictly regulate it. I believe that they will not gain much from converting 25 billion pounds of debt into bank shares. Instead, their original shares will be diluted to almost no sense of existence, and they will become "marginalized"...
To put it bluntly, you have messed up and need us to use money to help you. If this still affects the "normalization" of Northern Rock Bank, then don't think we will not hold Northern Rock Bank accountable for its previous operational problems. Our investigation is not over yet. Do you think we dare not arrest a few people?
Faced with such a situation, what can the shareholders do?
At least Standard Chartered Bank is willing to spend 500 million pounds to acquire their shares...