MR Giants to Merge

The MR landscape is to undergo a seismic shift as VNU, the world's biggest research provider, buys IMS Health, the next biggest in the US, in a transaction valued at 5.8 billion Euros ($7.0 billion). VNU's CEO is confident that the deal will quickly lead to major cost savings and new revenues.

The two companies' 2004 worldwide research revenue amounted to more than $5 billion, between two and a half and three times that of the next largest company, TNS. In today's trading statement, VNU reported that its revenue growth was approximately 6% for the first half of the year. VNU Chairman and CEO Rob van den Bergh reportedly told journalists in a conference call that he is 'absolutely confident we can achieve at least 85 million Euros in costs savings, and 135 million in new revenues, by the third year of our merger'.

On completion of the process, expected to happen in the first quarter of 2006, VNU will be led by executives from both companies. Van den Bergh will be CEO of the new company, while David Carlucci, currently IMS CEO and President, will be Deputy CEO. The company will have a Supervisory Board of ten people, four of whom are now members of the IMS Board of Directors.

The company says it will seek new revenue opportunities through cross-selling, geographic expansion, and developing new products - 'particularly those that build upon VNU's global consumer research capabilities and the combined analytical resources of both businesses'.

VNU shareholders will hold approximately 65% of the new combined company, and IMS shareholders 35%. Under the terms of the agreement, IMS shareholders will receive $11.25 in cash and 0.60415 VNU shares for each IMS share. This represents a 16% premium over the average IMS share price over the last 30 days.

'This merger of two industry leaders gives us the scale and capabilities to meet growing client demand for the must-have market intelligence that drives critical business decisions,' said van den Bergh. 'With the expertise of our combined teams, we will be able to create a new generation of advanced analytical services, and accelerate the development of our advisory and consulting capabilities.'

'Our companies know each other well and are already working together successfully in various markets around the world,' said Carlucci. 'Our clients will benefit from the integration of our data assets and expertise. As a company, we will benefit from financial strength, an impressive list of blue-chip clients, and global reach. This is a strategically compelling transaction that provides real value to clients, employees and shareholders in both the near- and long-term, as well as exciting opportunities for growth.'

The three largest research operations in the new company will be IMS Health, AC Nielsen, and Nielsen Media Research. Operating in more than 100 countries, IMS Health tracks more than one million prescription-drug brands daily, covering more than 70% of all pharmaceutical sales transactions worldwide. AC Nielsen provides research on consumer behaviour to more than 9,000 clients in 100 countries in the CPG, financial services, automotive, IT, telecoms, travel and pharmaceutical industries. Nielsen Media Research analyses audience and advertising information for broadcasters, advertising agencies and Internet companies, including measurement of TV audiences for more than half the world's population.

The new company will trade on the Euronext Amsterdam and the New York Stock Exchange. VNU will be domiciled in the Netherlands with headquarters in New York. The merger is subject to approval by the shareholders of VNU and IMS, as well as regulatory approvals. Daily Research News will be following the progress of the merger as well as discussing the issues raised and the implications for the industry, in the weeks to come.

VNU is online at www.vnu.com while the IMS web site is at www.imshealth.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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