VNU Comes Out Fighting
April 10 2006
VNU has published a detailed presentation to counter criticism from its outspoken shareholder KVAM, and promote the firm's recommended private equity offer. The document describes KVAM's proposed 'Plan B' as flawed, and its opposition as based on 'misleading assertions and incomplete analysis'.
KVAM had last week suggested an alternative approach, which included the selling-off of 30% of the media and information giant.
The VNU / Valcon presentation 'shows why the Offer is a superior alternative for shareholders'. Among other statements it claims that:
- The Boston Consulting Group, whose figures underpin the KVAM case, has publicly cautioned against KVAM's use and 'mischaracterization' of its report
- risks inherent in VNU's business and challenges associated with achieving potential cost savings have been overlooked
- KVAM's work is 'inaccurate, sloppy and a misleading basis upon which to render important decisions'.
The presentation says that the Consortium's €28.75 per share Offer provides shareholders with more certainty than all other alternatives, including immediate cash realisation.
It makes comparison of the Offer premium with those of 'peer EBITDA multiples', based on a median of a number of key information and media competitors: Arbitron, Dun & Bradstreet, GfK, IMS Health, Ipsos, McGraw-Hill, Pearson, Reed Elsevier, Thomson, TNS, Wolters Kluwer and WPP; and charts the superior premium from the current Offer. It also describes KVAM's projections as 'unrealistically inflated' and says the shareholder's cost savings assessment is 'unfounded on multiple Dimensions'.
According to VNU and co-authors Valcon, KVAM fails to mention key risks identified in the BCG
Report, leaving out the advisor's 'repeated and overarching caveats as to fundamental challenges to the businesses, execution challenges to achieving cost savings, and disclaimers as to the limitations on BCG's work based on their reliance on outdated, outside-in information.' These risks include the 'significant cost and change management program required' to optimise the performance of the MMI division and the 'imminent threat' to some of the division's products; as well as the 'serious coordination and synergy risk' inherent in the firm's 60% stake in NetRatings.
The presentation also refutes in detail KVAM's assertion that 'The auction was a closed process full of conflicts of interest', pointing to the involvement of 'highly respected merchant banks' and the lack of offers forthcoming from alternative bidders, due to 'a lack of interest at these valuation levels, not a lack of knowledge'. It quotes WPP CEO Sir Martin Sorrell, from the Financial Times of March 8, to support this: '...the...price tag, even before the latest small increase, [is in] 'nosebleed territory'...'.
The VNU web site is at
www.vnu.com and the presentation can be found in the 'Investors' section.
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.
