Daily Research News Online no. 5266

VNU Recommends Sale

March 8 2006

VNU, parent of ACNielsen and Nielsen Media Research, has announced that it has agreed to a public offer from a private-equity consortium including AlpInvest Partners, valuing the company's equity at approximately EUR 7.5 bn in cash, or EUR 28.75 per common share. The option of breaking the company up has been rejected.

The consortium has said it intends to keep VNU substantially together as an integrated company pursuing existing long-term strategy. VNU's Supervisory and Executive Boards announced their unanimous support for and recommendation for the intended offer, and entered a merger protocol after a meeting of the company's Supervisory Board in Haarlem yesterday evening.

The consortium consists of AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., and Thomas H. Lee Partners. The offer represents a multiple of 13.4 times 2005 normalized EBITDA, an attractive valuation compared with recent trading of peer company stocks as well as VNU's stock.

Aad Jacobs, Chairman of VNU's Supervisory Board, said: 'Based on a long and careful analysis of various alternatives, including remaining a stand-alone company and breaking up the company, we concluded that this transaction best serves the interests of VNU's shareholders, clients and employees. The all-cash offer provides shareholders with an attractive price that fully reflects the independently assessed fair value of the company.'

CEO Rob van den Bergh said the new owners 'support our long-term strategy of growth through expanded market coverage; expansion into developing markets; technology and service innovation; and development of integrated business solutions for our clients.' Van den Bergh is expected to step down as CEO upon the closing of the transaction.

The consortium's statement said it was 'investing in the future of a company with an unmatched portfolio of market-leading assets, a highly knowledgeable and dedicated employee base and a sound strategy for the future. We intend to capitalize on these strengths by keeping VNU substantially together as an integrated company and continue to pursue its long-term strategy...'

VNU says the decision takes into account current business challenges such as price compression in its Marketing Information group, and rapid technological change affecting each of its business units. It also recognises the uncertainties inherent in achieving projected cost savings - these are possibly more difficult to achieve as a public company; and the fact that the Offer represents an attractive multiple on historical and projected cash flows, even assuming Project Forward and the company's long-term operating plan are fully achieved.

Before committing to the private-equity offer, the Supervisory and Executive Boards also thoroughly analyzed the risk-reward benefits of breaking up the company. The Boards determined that pursuing a break-up would not be as attractive to shareholders as a sale of VNU in a single transaction, influenced by a number of factors:

the uncertainty of completion
the loss of economies of scale such as Project Forward, which may not be obtainable if the company were split apart
adverse tax effects including certain tax advantages as a Dutch company that would not be available to spin-off companies based in the US
anticipated negative reaction from clients, to whom VNU has promoted the benefits of its integrated offer; and
the potential disruption caused by the break-up.

The Offer will be an all-cash offer for all of the issued and outstanding common shares and all of the issued and outstanding 7% preferred shares of VNU N.V. Based on the Offer price of EUR 13.00 per 7% preferred share, the value of the offer for the 7% preferred shares is approximately EUR 2 million. The Offer represents a 23% premium over VNU's closing price on July 8, 2005, the last trading day prior to its announcement of the planned merger with IMS Health.

The aggregate value of the transaction is approximately EUR 8.6 billion, or $10.3 billion, including net indebtedness. VNU will not declare or pay any dividends on its common shares. Launch of the Offer is subject to completion of preparations and customary conditions.

VNU expects the public offer for its shares to commence in early to mid-April, and the acceptance and settlement of all tenders by the end of May. The group is online 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.