Bridge to Buy Dow Jones Unit for $510 Million

Dow Jones & Co. said Tuesday that it will sell its financial information service to Bridge Information Systems Inc. for $510 million.

The deal will make Bridge the world’s second-largest provider of electronic financial data, such as stock and bond prices, with an estimated $1 billion in revenue. Reuters Holdings will remain No. 1.

With the sale, Dow Jones can focus on its main business news operations, including the Wall Street Journal, and shed an operation that had damaged its profit and stock price and put top management under pressure from shareholders.

Dow Jones bought the business, formerly known as Telerate, for $1.6 billion in the late 1980s. Bridge, which will rename the operation Bridge Telerate, adds Dow Jones Markets’ Treasury bond data and analytical functions to its service.

The sale had been widely expected since the company said in October that it would consider what to do with Markets. A month later, it sharply curtailed spending on the service. Bridge was among a number of reported suitors.

The price includes $360 million in cash and $150 million in preferred stock, which can be converted into a 10% stake in closely held, New York-based Bridge.

Dow Jones lost $802.1 million in 1997 as huge charges to reduce the value of Markets offset success in other businesses such as the Journal. The company expects earnings to again be reduced by charges related to Markets when the deal closes in the second quarter, but Dow Jones said earnings should improve later in the year once the money-losing unit is off its books.

Markets now has about 3,500 employees and about 94,000 computer terminals in use. The business’ estimated revenue for 1997 is $771 million last year, a 9% drop from 1996 revenue.

A combination of Bridge and Markets would have 169,000 terminals and would leapfrog Bloomberg in terms of revenue, but it would still remain far behind Reuters.

Bridge shareholders include New York investment group Welsh, Carson, Anderson & Stowe and brokerage Lehman Bros. Holdings Inc.

The announcement was made after U.S. markets closed.