VNU Swallows Horse Pill With IMS Purchase

13 July 2005

Dutch-domiciled business information group VNU, whose portfolio includes US research giants A C Nielsen and Nielsen Media Ratings, has stretched its resources to the limit with the acquisition of IMS Health, a US-headquartered world leader in pharmaceutical information services.

The purchase price of $5.8 billion (€4.81bn; £3.30bn) in stock and cash exceeds VNU's own market value. Many investors believe the deal overpriced - triggering a rash of nervous twitches and driving VNU's share price down 3.7% to €22.49.

Analysts, however, were upbeat. Amsterdam-based stockbroker Stroeve said the size of the deal was a surprise and the price steep, but hailed it as an "outstanding" strategic fit for VNU.

VNU chief executive Rob van den Bergh, who will lead the combined company, claims there is "compelling strategic logic" that makes the marriage "a perfect fit".

The union will spawn "a global leader in market intelligence", providing data on sales and the effectiveness of advertising to some twelve thousand clients across 110 nations. Its combined client list includes such titans as Coca-Cola, Pfizer, Unilever, Glaxo Wellcome and Procter & Gamble.

The combined company, which projects €4.7bn in sales this year (two-thirds from VNU), will generate 57% of of its income from North America.

Data sourced from Financial Times Online; additional content by WARC staff