Knight Vinke Urges VNU Deal Rejection
April 4 2006
VNU shareholder Knight Vinke Asset Management (KVAM) has issued a statement saying it intends to reject yesterday's recommended offer for VNU of Euros 28.75 per share, and will encourage others to do likewise.
KVAM and other major shareholders had already expressed doubts about the deal when it was first announced in March. Fund manager Fidelity International, which owns 15% of VNU, said it was 'unlikely to support' the offer, shortly after it was first broached, on March 10th (www.mrweb.com/drno/news5278.htm ).
KVAM, which holds approximately 2% of VNU shares, says it also intends to seek a seat on the VNU Supervisory Board for Eric Knight, its Chairman and CIO, in the event that a vacancy occurs at or prior to the Annual Meeting on April 18, 2006.
Key points made by KVAM include:
- At no point have KVAM or other large shareholders asked for a sale - and many had tried to persuade VNU against its highly acquisitive strategy in 2005, in particular the plan to buy IMS Health.
- KVAM believes that with new management the group could generate substantially higher profits from its existing core businesses - whereas the credibility of the existing board is at an 'all-time low'.
- the offer is said to undervalue VNU by as much as Euros 7 to 12 per share (i.e. by 25 to 40%)
- the sale process adopted by the VNU boards and their advisers has, KVAM states, deprived VNU shareholders of alternative methods of achieving a potentially higher aggregate value for their shares, and shareholders therefore have no credible benchmark against which to measure the current Offer.
- KVAM feels that the process has not been handled impartially and that numerous potential conflicts of interest are present. Without suggesting any impropriety, KVAM feels that insensitive and unwise approaches have been taken, particularly in entering the new deal with the same advisors used in the failed IMS bid.
- the Board has not seemed to take steps recognising the possibility of the offer failing, despite the known objections of shareholders. KVAM feels in particular that VNU could be searching for a new CEO, 'as a precautionary step'. As a result KVAM has been making its own enquiries.
- VNU has committed to paying the private equity consortium a fee of Euros 30 million in the event that the Offer fails to obtain 95 percent acceptance, despite the obvious shareholder opposition.
The statement concludes by saying that KVAM 'cannot understand.. why so little has been done to pursue stand-alone options. It is KVAM's belief that the majority of VNU's shareholders do take a longer term perspective and that, once again, the boards have misread the shareholders' objectives.'
KVAM is a privately owned investment management firm 'specializing in institutional shareholder activism'. According to its web site, the firm 'invests in underperforming large cap public companies and instigates change by highlighting inefficiencies with respect to structure and/or poor corporate governance, broadly defined'. It is online at
www.kvamllc.com . VNU's home page is at
www.vnu.com
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
