Reuters finally confirms that Instinet is up for sale

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The Independent Online

Reuters, the financial information giant, yesterday confirmed rumours that it has put its Instinet electronic shares trading business, worth about $2bn (£1.1bn), up for sale. A divestment could lead to a payout of the proceeds to shareholders.

Reuters, the financial information giant, yesterday confirmed rumours that it has put its Instinet electronic shares trading business, worth about $2bn (£1.1bn), up for sale. A divestment could lead to a payout of the proceeds to shareholders.

Instinet had previously been part of Reuters' strategy to provide a "straight-through processing" service for investors, allowing clients to access the company's news and information and trade on it through a single product.

It is understood that UBS, the investment bank, is now exploring options for Instinet, which is based in the US. Reuters has a 62 per cent stake in the business. Possible buyers are thought to include rivals such as the Chicago Mercantile Exchange, Nasdaq or Archipelago.

In a statement, Reuters said: "Strategic alternatives are being considered by Reuters and Instinet, including a possible sale, merger or other business combination or corporate transaction. As part of this review, Reuters, Instinet or their advisers may engage in discussions with third parties regarding such possible transactions. However, neither Reuters nor Instinet has determined to pursue any specific transaction."

A Reuters executive director, Devin Wenig, made comments last week that many took as confirmation that the company was already in talks over Instinet. The Reuters statement yesterday was careful not to go that far.

Tom Glocer, the chief executive of Reuters, set off speculation of a sale at an industry conference in September, though he implied at the time it would not happen any time soon. He told the event: "In the short to medium term, we are doing a pretty good job at Instinet, and on balance there is more upside than downside, so I prefer to continue to work that asset a little bit longer... on balance we think there is more value left in Instinet than is currently embedded in that share price, and we think we are better able at least in an interim period to help extract that for Reuters' shareholders."

After the 1990s stock market bubble burst, Instinet's workforce has gone from 2,400 people down to about 1,000 and is now profitable.

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