Standard & Poor''s Ratings Services yesterday said it placed its ratings, including its ''A-'' long-term corporate credit and senior unsecured debt ratings, on Stamford, Conn.-based information solutions provider The Thomson Corp. on CreditWatch with negative implications.

At the same time, Standard & Poor''s placed its ''BBB+'' long-term corporate credit and senior unsecured debt ratings on London, U.K.-based Reuters Group PLC on CreditWatch with developing implications. Developing implications mean that the ratings could be raised, lowered, or affirmed, depending on the outcome of Standard & Poor''s review.

The ''A-2'' short-term corporate credit rating on Reuters is affirmed. The CP ratings on Thomson and Reuters are also affirmed.

The CreditWatch listings follow the announcement that Thomson is in discussions to acquire Reuters for about $19 billion, with Reuters shareholders expected to receive both cash and Thomson shares, valuing each Reuters'' share at 705 pence. Upon closing, we expect 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 will own the remaining 24 per cent.

"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 Standard & Poor''s credit analyst Lori Harris. "We believe that Thomson''s financial risk profile will no longer be in line with an ''A-'' rating," 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 2006 revenues of about $5 billion 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, 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Although the long-term corporate credit rating on Reuters will be withdrawn upon closing of the transaction, it is possible that certain ratings on Reuters'' debt issues will remain; Standard & Poor''s expects that ratings on any remaining debt issues at Reuters will be equalized with those on Thomson following the closing.

Standard & Poor''s will continue to monitor current developments and meet with management to discuss the combined firm''s financial policies, pro forma credit measures for the transaction, and business strategies. The resolution of the CreditWatch placements depends on the successful closing of the transaction and on obtaining the necessary shareholder and regulatory approvals in the various markets.