Liberty Partnership Deal With EJV Seems Dead; Same Goes For Reuters' Offer To Buy

The EJV Partners L.P. appears to have scrapped negotiations with a would-be seventh partner and a would-be new owner. The struggling fixed-income data and analytics vendor rejected a recent Reuters offer to buy it out. Meanwhile, talks to add Liberty Brokerage Inc. as a new partner -- and general manager -- seem to have come to an end.

The fact that the EJV hasn't come to terms with either party leaves the fixed-income securities marketplace once again wondering what's in store for the vendor -- and whether the six brokerage firms comprising it will see a return on their $80 million investment any time soon.

While EJV officials were unavailable for comment at press time, other sources say the vendor is now at a crossroads. They say that the six partner firms -- beyond vetoing unacceptable proposals -- are not playing an active role in helping revitalize the vendor. With the EJV thus unsupported -- and its staff continuing steadily to quit their jobs -- observers are left wondering whether the formerly high-aspiring vendor is poised to wither away.

Within the past few weeks, sources say, Reuters made an offer to acquire the EJV; some sources say that Reuters came to the table willing to spend $30 million on the EJV. However, sources say, the EJV partners rejected Reuters' offer because they were hesitant to give control of their customer relationships to a large and powerful middleman. A Reuters spokesperson declines to comment on the offer.

Sources say EJV partner Goldman Sachs & Co. in particular was dead set against a Reuters deal. They say that representatives of the firm believed that Reuters would soon take steps to incorporate a transactional service as part of the EJV's line of offerings -- something EJV president Bruce Peterson has repeatedly said was not in the cards. Goldman fixed-income partner David Ford did not return a call seeking comment.

Reuters has for some time been eagerly angling for ways to enhance the fixed-income services it offers. However, its Decision 2000 service has so far fallen short in its struggle to provide Bloomberg with even a little competition. Sources note that the current offer was not the first time Reuters tried to snap up the EJV: They say the vendor approached the EJV for similar reasons soon after its formation.

Cash-rich Reuters has indeed been in an acquisitive mood of late. Last month, it bought retail brokerage applications developer American Real-Time Services Inc. (IMD, April 12). And sources say the vendor has been given the internal go-ahead to disperse more of its $1 billion bank account on corporate purchases.

Meanwhile, the deal to make Treasury broker Liberty a seventh EJV partner has apparently hit a roadblock. Back when word of the talks first emerged, Peterson indicated he was eager to come to terms and said he expected a deal to be announced within one to two months. The two months are now up, however, and no deal is done.

Sources say that the Liberty/EJV talks were driven to stalemate by some fairly fundamental points of contention. They say that Liberty sought more control over management of the EJV than the partners were willing to cede. What's more, sources say that Liberty was unwilling to kick in enough cash to make the deal worthwhile.

The lack of progress on the partnership talks, coupled with the recent separate formation of a technology and development alliance by the EJV and Liberty's subsidiary Market Vision Corp., suggests that Liberty and the EJV may have come to the conclusion that they could take advantage of synergies without establishing new corporate ties. Early in May, Market Vision and the EJV said they would cooperate on getting an unbundled menu of EJV components to market using Market Vision's platform (IMD, May 10).

As all this goes on, the EJV's community of users and would-be users remains in the dark. Firms that have long been interested in taking advantage of the EJV's once-much-touted link between the buy and sell sides increasingly find themselves unable to do much but hope for the best: While their EJV representatives are no less eager to please, they are increasingly unable to inform, sources say.

Following are a few of the questions that remain unanswered:

Is the EJV still actively seeking a new partner, buyer or a cash infusion of some kind?

What happens if the EJV does not find a way to get new capital?

How goes it with the EJV's new strategy of unbundling its data and analytic services? Has the EJV begun, as planned, to convert non-paying users to paying users?

Has the EJV encouraged -- or at least not discouraged -- the exodus of its staff? Will more layoffs be forthcoming? How many personnel remain on board?

Where is the official announcement of the Market Vision/EJV alliance?