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November 16, 2005 9:24 pm

VNU set to abandon $7bn IMS Health bid

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VNU, the Dutch business information group, is poised to announce that it has abandoned its $7bn (6bn) cash takeover of IMS Health, the US pharmaceutical industry data gatherer.

The decision, which may be announced as soon as Thursday, is likely to have grave consequences for senior VNU management notably Rob van den Bergh, chief executive according to people who are close to the situation.

The deal’s abandonment would prove one of the most significant victories for shareholder activists in recent times. It would follow previous successful investor revolts that brought change at Dutch companies including Royal Dutch Shell and Unilever.

Mr van den Bergh had attempted to steer through the biggest acquisition in the Dutch company’s history, and the seventh largest in the Netherlands, in the face of mounting investor resistance.

IMS shares have remained significantly above VNU’s offer price, indicating that investors did not believe the deal would succeed.

While there remained a faint possibility on Wednesday night that elements of the deal might yet be salvaged, people close to events said it was 90 per cent certain to be scrapped.

VNU and IMS had been talking for weeks about how to rescue or restructure the deal. The Dutch group recently conceded that scrapping it was among its options as it sought to salvage credibility.

But people familiar with the company say it has proved impossible to find an acceptable formula to satisfy shareholders, which include Templeton Global Advisors, Fidelity and Knight Vinke Asset Management.

In total, as many as 48 per cent of VNU investors are believed to have opposed the transaction, mostly on the grounds that it was too risky and costly. They wanted VNU to return cash via a share buy-back.

For Mr van den Bergh the set-back is likely to prove his downfall. He has led the company through a transformation from traditional publisher to a business information group focused on market research.

If he does resign, it may not be with immediate effect, said one person familiar with events. He may stay on for a time to ensure an orderly handover to a successor.

VNU owns AC Nielsen, the market research company, and Nielsen Media Ratings, which measures TV audiences.

It publishes trade journals including Billboard and Hollywood Reporter.

The deal was announced in July and heralded by Mr van den Bergh as creating a global leader in market research. But investors quickly turned on the company, citing its chief executive’s poor track record in integrating acquisitions and a share price that has plunged under his stewardship.

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