Reuters plans to concentrate on its core information business, and phase out its role as a reseller of Tibco products.
Tibco will be free to pursue the financial services market directly, although it will be prevented from selling risk-management applications or market data systems for financial services companies, as Reuters said will continue to use Tibco technology both internally and embedded within its own products.
If Reuters completes a single sale of $100 million of Tibco shares within 12 months of the SEC filing, Tibco has agreed to purchase a similar number of its own shares from Reuters up to a maximum of $115 million. Reuters’ holding in the company is currently worth about $600 million.
When it filed for its IPO in 1999, Tibco revealed it had licensed to Reuters on a royalty-free perpetual basis all intellectual property and products created until December 2011. This would place Reuters in a position to more easily develop products that compete with Tibco’s own products.
Moreover, Reuters is entitled to embed Tibco’s technology into its product offerings, though Reuters must pay Tibco product fees if it resells any products on a standalone basis.
The IPO document revealed that Tibco could not compete with Reuters in the lucrative financial markets. While Reuters has to pay Tibco a percentage of fees from sales.
This article was based on material originally published by ComputerWire.
