Dow, Reuters take-over moves shows sector hot again

By Kenneth Li

NEW YORK (Reuters) - Take-over approaches for two global financial news and information providers in one week could be mere coincidence, but analysts say it reflects a realisation that the sector had become undervalued.

Shares of Reuters Group Plc RTR.L, Thomson Corp. TOC.TO and Pearson Plc (PSON.L) rose earlier this week after Rupert Murdoch's News Corp. NWSa.N announced a pricey bid to buy Dow Jones & Co. Inc. DJ.N, owner of the Wall Street Journal, Dow Jones Newswires and MarketWatch.

Then on Friday, Reuters said it had received a take-over approach, sending its shares up as much as 32 percent to a five-year high of 649-3/4 pence, valuing the U.K.-based company at about 8.2 billion pounds.

Reuters did not identify the suitor but Thomson was widely touted in various media reports as the potential bidder.

A deal would create a financial news and data company with a market share topping that of Bloomberg LP, the two companies' main rival.

Analysts said the flurry of activity highlights interest in a financial news and information sector at a time when financial markets are booming.

"The media sector has become grossly undervalued over the last five years," said Nick Train, founder and a fund manager at Lindsell Train Investment Management, which holds about 4 million shares in Reuters.

"Really smart investors like Anthony Bolton have recognised this and built up a huge position."