Break fee a sticking point for VNU offer

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VNU, the Dutch business information company, on Monday conceded it might be forced to abandon its $7bn offer for IMS Health, the US market research group, in the face of trenchant opposition from almost half its shareholders.

Such a development would mark one of the most significant demonstrations of shareholder power, and could ultimately lead to the departure of Rob van den Bergh, VNU chief executive, or even the break-up of the publishing group that he has led since 2000.

Shareholders claiming to represent 48 per cent of outstanding VNU shares have told the company they will not support the transaction “under any circumstances”, VNU said in a statement.

VNU said it stood by the rationale for the deal as negotiated, as did IMS Health, but they had discussed “various possible alternatives, including a revised merger agreement as well as the termination of the agreement”.

Releasing the statement now, 10 days after the FT first reported VNU was considering reshaping or terminating the deal, suggests the two sides are still some way from agreeing a way forward.

One sticking point is understood to be the $125m break fee that might be payable should either side walk away from the transaction. This might be payable even if the deal was restructured, as the original proposal would have to be broken.

Fidelity and Templeton, which each hold almost 15 per cent of the stock, are understood to be among the shareholders that told VNU they could not support the bid at any price.

Knight Vinke Asset Management, which has sought to co-ordinate opposition to the bid, confirmed it delivered a letter to the VNU supervisory board last week.

It has signed a confidentiality agreement with VNU and would not discuss the contents of the letter, but it is understood it was a response to the shareholders’ earlier meeting with Aad Jacobs, VNU’s chairman, and set out the scale of opposition to the deal. Mr Jacobs is understood to have been left in no doubt that the deal in its current form would be voted down.

If the deal is scrapped, Mr van den Bergh’s position would be untenable, said Peter Paul de Vries, who leads VEB, the Dutch shareholder association that also opposes the deal. Investors have criticised Mr van den Bergh’s track record and management style. The abandonment of the transaction - the biggest ever attempted by VNU and the seventh largest in Dutch corporate history - could also open the door to the break-up of VNU, which may attract private equity interest. IMS declined to comment. VNU would say nothing beyond its published statement.

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