VNU Deal Unlikely to Succeed

From Reuters

VNU, Dutch owner of research company ACNielsen, accepted a $9-billion cash takeover offer by private equity firms, but the deal looked doomed to failure after an icy reception from investors.

The private equity firms, in an agreement announced Wednesday, raised their bid slightly to $34.23 a share, but VNU shares were trading at a 4.8% discount to the value of the offer -- signaling market doubts that the takeover would succeed.

Fund management giant Fidelity International, which usually does not comment on individual stocks, said it was unlikely to support the offer by six firms -- including Kohlberg Kravis Roberts & Co. and Blackstone Group -- but did not say why.

Fidelity’s global funds own about 15% of VNU, and the offer requires support from 95% of shareholders for approval.


Another investor, Knight Vinke Asset Management, said it would reject the bid, and asked VNU’s board to let shareholders vote on a new sale proposal, one that would sell or spin off two of VNU’s three business segments and restructure the third.

The deal was supposed to distance the Netherlands-based company from a year of upheaval after its shareholders, including Fidelity and Knight Vinke, revolted against plans to buy healthcare data provider IMS Health for $7 billion.

They quashed that deal and forced VNU’s chief executive to resign, ultimately making the company takeover prey.

“We would have liked to stay independent but sometimes life goes a little different,” outgoing CEO Rob van den Bergh said. “I think we got a good price, but the shareholders have the last word.... More is not there.”


The private equity group will not raise its bid, regardless of what shareholders say, people close to the firms said.

Knight Vinke said it put forward a proposal last month to sell or spin off VNU’s media measurement unit, which includes the Nielsen TV ratings arm, and the business information unit that houses trade magazines Billboard and Hollywood Reporter.

The New York-based firm, which disagrees with VNU management about the efficiency returns of keeping the units together, also wants to restructure the ACNielsen consumer tracking service and have its chief information officer on VNU’s supervisory board.

VNU said it already contemplated selling the company in pieces, but received no such offers, adding that a break-up would have adverse tax effects, cost the company economies of scale and go against its customers’ wishes.


The private equity group said it planned to keep VNU “substantially together as an integrated company,” while VNU’s Chief Financial Officer Rob Ruijter said the group agreed not to break up the company for at least 18 months after closing the deal.

The group of buyout firms also includes Carlyle Group, Hellman & Friedman, Thomas H. Lee Partners and AlpInvest Partners.

They were advised by JPMorgan, ABN AMRO, Deutsche Bank, Citigroup and ING.