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New Delhi, May 9 (UNI) Rating agengy Standard&Poor has placed Canada-based information solution provider Thomson Corporation on CreditWatch with negative implications following its offer to buyout British news and financial information company Reuters Plc.

The world leading rating agency, at the same time, has also placed the UK-based newswire on CreditWatch with developing implications, meaning that Reuters' rating could be raised, lowered or affirmed.

The CreditWatch listings follow the announcement that Thomson is in discussions to acquire Reuters for about 19 billion dollars, with the latter's shareholders expected to receive both cash and Thomson shares, valuing each share at 705 pence.

''We expect that the shareholders of Woodbridge Co (the Thomson family holding company) will own 53 per cent of the combined company, which will be known as Thomson-Reuters, while Thomson shareholders will own about 23 per cent and Reuters shareholders the remaining 24 per cent,'' S&P said.

The negative CreditWatch placement on Thomson is based on the likelihood that the combined company's pro-forma leverage will increase significantly in the near term following the closing of the proposed transaction, said S&P's credit analyst Lori Harris. ''We believe that Thomson's financial risk profile will no longer be in line with an 'A' rating,'' Ms Harris added.

Still, the acquisition of Reuters should enhance Thomson's business risk profile as the combination of the two companies would create a global leader in the business-to-business information markets.

With last year's revenues of about five billion dollars and an EBITDA margin of 18 per cent, Reuters will meaningfully increase Thomson's scale and geographic footprint in the electronic media segment.

Upon closing of this deal, Standard&Poor's expects that a downgrade on Thomson will be likely limited to one notch, given management's strong commitment to delever the combined business from free cash flow to levels more appropriate for the 'BBB+' rating.

Although the long-term corporate credit rating on Reuters will be withdrawn upon closing of the transaction, it is possible that certain ratings on Reuters' debt issues will remain.

The agency expects that ratings on any remaining debt issues at Reuters will be equalised with those on Thomson following the closing.

UNI