VNU Seeks Exit from IMS Deal

08 November 2005

Reminiscent of a python choking on a swallowed elephant, Dutch business information giant VNU is seeking to disgorge IMS Health - the US company it agreed earlier this year to acquire for $7 billion (€5.92bn; £4.0bn).

Driven by its shareholders' opposition to the IMS deal, the Haarlem, Netherlands-registered company is currently negotiating with its intended meal. Those close to the discussions say the two sides are poles apart as to severance terms.

According to a VNU statement issued Monday, the company is "having wide-ranging discussions with IMS" to address the development.

The statement continued: "Although both companies continue to believe the transaction, as negotiated, is in the best interests of their respective shareholders, the companies have discussed various possible alternatives, including a revised merger agreement as well as termination of the agreement."

IMS is said to be demanding a termination payment running into tens of millions of dollars in recompense for expenses incurred arranging the deal and damage to its reputation caused by VNU's attempted withdrawal.

VNU, on the other hand, says there is no reason to make any payment, given that the terms of the purchase were conditional on the Dutch company receiving approval by a shareholder vote.

It argues that if the two sides cannot agree a termination payment the matter will go to a vote of their respective shareholders which - given the current impasse - would almost certainly result in a twin 'no' vote with neither side receiving compensation.

Meantime, according to the VNU statement: "Pending any such development, the companies are moving forward pursuant to their merger agreement."

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