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Thomson Reuters Corp. is hoping to jump-start growth in its core financial data business, ceding control of the unit to private equity giant Blackstone Group LP in a $17-billion (U.S.) deal to form a new joint venture.

Blackstone leads a consortium that includes the Canada Pension Plan Investment Board (CPPIB) – a long-time investor in Blackstone funds – and Singaporean sovereign wealth fund GIC. The group will take a 55-per-cent stake in a new corporation that spins out Thomson Reuters's financial and risk division as a separate business. The unit derives much of its revenue selling the news and data to the global financial industry.

The decision by Thomson Reuters to partner with Blackstone is the product of four years of sporadic discussions between the two companies, which picked up steam starting in mid-2017. And it marks a watershed moment for Thomson Reuters, pulling apart a news and information empire forged little more than a decade ago, when Canada's influential Thomson family merged Canadian publisher Thomson Corp. and Reuters. But that deal was sealed at the cusp of a global financial crisis and growth in the financial and risk division has often been anemic in the years since.

"We've spent the last six years trying to basically fix things," Jim Smith, chief executive officer of Thomson Reuters, said in an interview. His team had gained confidence that it could continue growing the financial and risk division, "so our focus has turned in the last year or so on, okay, how the hell do we accelerate growth?"

When the chance to partner with Blackstone came along, "we thought they'd be positioned to grow the business faster, given their deep relationships across the financial industry," Mr. Smith said.

Tuesday's deal gives Thomson Reuters a powerful new partner and stable, long-term capital to compete more aggressively for space on desks at banks, trading houses and hedge funds. Its archrival, Bloomberg LP, led by billionaire and former New York mayor Michael Bloomberg, controls about a third of that market, compared with Thomson Reuters's 23-per-cent share, according to Burton-Taylor International Consulting LLC.

The pact values the financial and risk arm at $20-billion, making it Blackstone's largest pure private-equity deal, excluding larger buyouts by its real estate group. Of $17-billion in gross proceeds flowing to Thomson Reuters, $3-billion is cash from Blackstone and the remaining $14-billion is being financed with new debt and preferred equity, facilitated by three of the largest U.S. banks: JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc.

Thomson Reuters retains a 45-per-cent stake in the financial and risk business. It also keeps full ownership of its legal and tax and accounting businesses, as well as Reuters News, which will continue to be led by Mr. Smith and his management team. Crucially, the new corporation will sign a 30-year contract to pay at least $325-million annually to Thomson Reuters for access to Reuters content, promising stability for the news operation.

With the proceeds, Thomson Reuters intends to pay down about $3-billion in existing debt; spend up to $2.5-billion on taxes and expenses setting up a standalone company; and invest an estimated $1-billion to $3-billion in the legal and tax and accounting businesses, with the potential to make acquisitions. The balance of cash – anywhere from $9-billion to $11-billion – will go toward a share buyback.

Woodbridge Co. Ltd., the Thomson family holding company that currently owns 63 per cent of Thomson Reuters, plans to take part in the share repurchases, maintaining an ownership stake of 50 to 60 per cent. Woodbridge also owns The Globe and Mail.

News and data, delivered in milliseconds along with analytics and communications tools, are the lifeblood of trading floors. Thomson Reuters has thrived at providing data feeds through its Elektron platform, but selling high-priced desktop set-ups has proven more difficult. In the first nine months of 2017, desktop revenue derived primarily from the flagship Eikon platform fell 4 per cent.

Even as Thomson Reuters struggled to speed up growth in financial and risk, the division had come to dominate Thomson Reuters's fortunes, accounting for $6.1-billion of the company's $11.2-billion in total revenue in 2016. By spinning it out, the company hopes to extract greater value, while making its remaining businesses more focused.

For Blackstone, the deal appears more of a gamble on the market data industry. The New York-based firm already co-owns Ipreo, which provides financial-services technology, data and analytics to banks, institutions and individual investors. Taking control of the financial and risk business built by Thomson Reuters allows the private equity firm to push into the sector on a larger scale, picking up a subscription business with recurring revenue.

The division's current leadership under president David Craig will lead the transition to the new company, where they are expected to join forces with Blackstone staff under a new board of directors. The private firm will also be more aggressive than Thomson Reuters could, and Blackstone is likely to pursue further cost-cutting.

"There are just differences in the pace at which a privately held company can take on some challenges, not worried about the quarter-to-quarter reporting," Mr. Smith said.

Shares in Thomson Reuters Corp. jumped 7 per cent higher to $57.37 (Canadian) on Tuesday, after Reuters first reported the deal, clawing back most of the 8 per cent lost over the last 12 months. Blackstone shares closed down 1 per cent.

The transaction is expected to close in the second half of 2018.

With reports from Andrew Willis and Jacqueline Nelson