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Last updated: November 17, 2005 7:27 pm

VNU: A company in no mood to take blame

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VNU on Thursday caved in to shareholder demands and scrapped its planned $7bn acquisition of IMS Health, the US market research company. But despite losing the argument, the Dutch business information group was seemingly determined to have the last word.

Its extraordinary outburst towards a group of investment funds including Templeton, Fidelity, Knight Vinke Asset Management and UBS – which it accused of short-term self-interest – underscored mounting boardroom concerns about who exercises authority over listed corporations.

Aad Jacobs, the VNU chairman who weathered a shareholder rebellion at Royal Dutch Shell and regularly tops Dutch media polls of powerful corporate figures, conceded that was his “main headache” as he rued the collapse of a deal the company had trumpeted as creating a global market research leader.

Investors will not have taken kindly to his attempt to shift the debate away from VNU strategy and management to a wider discussion of shareholder activism.

In their view, the attempt itself underscores a widely-held belief, even among those who did not publicly register their opposition to the deal, that VNU has an investor relations problem. 

However Sir Martin Sorrell, chief executive of WPP, the media group, said on Thursday at a media conference in Barcelona that such events might become more common. There was a tension between institutions and management, he observed. “It is an argument over who should control the strategy or the execution of the strategy of a company.”

Another group of disenchanted shareholders emerged yesterday to push for change. Investors representing more than one-third of shares in CSM, the Dutch food ingredients group, called on the company to address their concerns about under-performance and unfocused strategy.

At VNU Mr Jacobs conceded that the company’s “hardly spectacular” performance had given investors reason to doubt its ability to make a success of a huge acquisition. Rob Ruijter, chief financial officer, conceded it might have done more to flesh out synergies.

But the over-riding sense was of a company in no mood to accept blame. Mr Jacobs said an inquest would focus on whether mistakes had been made, but added: “Until now I have great problems to find them.”

Rob van den Bergh, chief executive, defended his record. “VNU is not in bad shape,” he said. “It is performing well.” He added that in July, the consensus was broadly positive towards the deal. “Only Fidelity was clearly negative from day one. [But] they only owned 3.5 per cent [of VNU] at that time. What we did not know was that Templeton had from January built up 15 per cent, Fidelity had built up 15 per cent since the announcement and, with two hedge funds and UBS, you were close to 40 per cent.”

Mr van den Bergh said he hoped his successor would have “a bit more trust” from investors. He will stay to help find his replacement.

As for VNU, speculation of dramatic change was dismissed. There will be a minor reshuffle of the supervisory board, partly to reflect Mr Jacobs’ retirement in April, but no broad strategic shift.

The business information unit, which publishes trade journals and stages exhibitions, will be retained, the company said. However one investor argued that, with both its chairman and CEO on the way out, there was every chance all that might soon change.

As for a weakened VNU becoming a takeover target, the company said it had received no concrete expression of interest since a tentative approach in March from Kohlberg Kravis Roberts, the private equity investor.

Sir Martin Sorrell said on Thursday that buying VNU’s two largest units – AC Nielsen, the market research arm, and Nielsen Media Ratings, a television measurement business – would be “a big mouthful”.

VNU will press on with plans to list in New York in the summer. Meanwhile €1bn ($1.2bn) is being returned to shareholders.

Will it satisfy them? “If not, I cannot imagine what more they can ask for,” said Mr Jacobs.






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