UK news agency Reuters Group Plc has confirmed that it has received a $17.6-billion takeover offer from Canadian data company Thomson Corp.

Last week, Rupert Murdoch''s News Corp had announced a $5-billion unsolicited bid for Dow Jones, publishers of the Wall Street Journal, which was turned down by Dow Jones'' controlling investors.

A Thomson - Reuters combine would create the world''s biggest news and financial data company, with about 34 per cent of the global market for "market data," ahead of rival Bloomberg''s 33 per cent.

According to the terms of the proposed deal, Reuters CEO Tom Glocer, would take over as chief executive of the combined entity on the retirement of Thomson president and CEO, Richard Harrington, who has transformed the Canadian company from traditional publishing to an electronic-based business, who would retire on completion of the deal

Reuters shareholders would get 352-1/2 pence in cash and 0.16 Thomson stock for each share, worth 697 pence a share at yesterday''s closing price. This amounts to a 42-per cent premium to Reuters closing share price last Thursday, the day before the bid was annouinced. The deal value is based on the number of outstanding Reuters shares.

However, any prospective takeover of Reuters would require the backing of the Reuters Founder Share Company. The group, run by 15 trustees, holds a single golden share in the company, giving it the power to block any hostile takeover of the firm.

Thomson, which has been expanding its non-data business, sees Reuters as a complement to its US news operations and European AFX News wire service. According to analysts a merger between Thomson and Reuters is logical as the Canadian company has the resources to finance a takeover and already has a news and financial data operation.

Over 80 per cent of Thomson''s revenues are generated in North America while Reuters, despite its large presence in the US, generates more than half of its in Europe. The two companies say the combined operations would lead to $500 million in savings annually through synergies within three years of a merger.

Moreover, by combining their operations, Thomson and Reuters would be better placed to take on their common rival Bloomberg as the three companies compete among themselves in the "terminal" market, providing news and financial data on stocks, currencies and bonds to banks, traders and brokerages.

If Reuters and Thompson shareholders approve, post merger, the two companies would maintain their independent listings and the merged entity would be called Thomson-Reuters, in which the Woodbridge, the Thomson family holding company that will own about 53 per cent and Reuters shareholders 24 per cent.

The companies would merge the Thomson Financial business and Reuters'' financial and media operations under the Reuters branding.

The two companies say the deal could close this year, the final completion of the merger may stretch on to 2008.