Publisher in €75m 'lose-lose' situation

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The Independent Online

No matter what it ends up doing, VNU, the Dutch publisher of Billboard magazine and the ACNeilsen television ratings in the US will be paying at least €30m (£21m) and up to €75m in fees to a spurned bidder.

"It's what's commonly called a win-win situation, but not one that anyone would like," said Alan MacDougall, managing director of the corporate governance consultants Pirc. He called the fees "unacceptably high". The Dutch Shareholder Association was similarly critical.

When VNU agreed last month to be acquired by a private equity consortium for €7.5bn, the deal ended months of speculation about the future of the group. A nucleus of shareholders had forced it to abandon a previously agreed $6.3bn (£3.5bn) sale to rival IMS Health.

Written into the terms was a break-up fee equal to 1 per cent of the value of the offer, payable to the private equity bidders - Blackstone Group, Kohlberg Kravis Roberts, AlpInvest, Hellman & Friedman, Thomas H Lee, and Carlyle Group - should VNU decide to sell to a higher bidder.

Such clauses are standard practice, especially in larger deals. What is less common is the €30m inducement fee VNU managers agreed to pay if the deal collapsed for some other reason.

That fee would "cover the expenses [of the private equity consortium] in the event the transaction is not consummated", said a VNU spokesman.

Eric Knight, one of the shareholders who led the charge to quash the IMS deal, has claimed publicly to have marshalled investors representing more than 70 per cent of VNU stock to reject the new offer, which he thinks is too low.

Shareholders must decide by the 5 May deadline whether they will accept. In they do so, VNU will have to pay €45m to IMS to fulfil the break-up clause it agreed when it decided to sell to the company last year.

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