VNU Falls to Private Equity Consortium

22 May 2006

After a long but ultimately unsuccessful rearguard action fought by New York-headquartered fund manager Knight Vinke Asset Management, global publishing and market research giant VNU has fallen to Valcon Acquisition, the six-strong private equity consortium which has strived to acquire the company over the past five months [WAMN: 09-Jan-06]

The consortium's offer, although approved from the outset by the VNU board, met vigorous opposition from some shareholders - notably KVAM's managing director Eric Knight. - on grounds that it significantly undervalued the Netherlands-headquartered company.

His sustained opposition in the face of fence-sitting by most other shareholders, forced Valcon to twice increase its offer, most recently in early May, from €28.75 ($36.66; £19.54) per share to €29.50.

The offer, which requires acceptance from 80% of VNU shareholders, passed its deadline at close of business Friday - at which point 77% of ordinary shares plus all of VNU's preference shares had declared in favor.

The consortium (Alpinvest, Blackstone, Carlyle, Kohlberg Kravis Roberts, Hellman & Friedman and Thomas H Lee) accordingly extended the deadline by a further five days, although its spokesman is confidentof a done deal: "[It] is going to happen, there is no question of that."

KVAM's Knight was philosophical (as well he should be given the profit creamed by his firm): "I think we did give them a pretty good run for their money. But I still believe we've left money on the table. We decided to let this one go in order to go fight the next one."

He declined to say what "the next one" might be.

The battle for ownership of VNU, whose assets include the AC Nielsen TV-ratings and market research businesses, conferences and exhibitions, plus magazines such as AdWeek, Billboard and Hollywood Reporter, has been closely watched around the world.

Interest focused on VNU because it was the first time a major private-equity buyout, agreed on friendly terms, had been opposed by shareholders who threatened to reject it and impose their own plan for resurrecting the company.

Valcon will now de-list VNU and appoint a new chief executive to succeed Rob van den Bergh, who quit after shareholders led by KVAM rejected VNU's ill-starred plan to buy US market researcher IMS Health for $7 billion late last year. It has agreed not to break up the company.

Data sourced from Financial Times Online and Wall Street Journal Online; additional content by WARC staff