Rebel investors threaten to derail €7.5bn VNU buyout

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The Independent Online

Rebel shareholders were threatening last night to derail a €7.5bn (£5.2bn) buyout of VNU, the Dutch market research and publishing giant.

Fidelity International, the fund management group, and the activist shareholder Knight Vinke both gave short shrift to the offer from a consortium of private equity groups.

Despite backing for the bid from VNU's bosses, Fidelity took the unusual step of issuing a statement saying it was "unlikely to support this offer". No reasons were given, but it is understood that Fidelity feels the consortium - which includes Kohlberg Kravis Roberts, Hellman & Friedman, Blackstone and Carlyle, among others - is trying to buy VNU on the cheap.

Knight Vinke also thinks the offer, worth€8.6bn including debt, is too mean and said again that VNU would fetch a better price were it broken into constituent parts.

Their determination to wring more generous terms may leave the buyout stillborn. For it to succeed, support must be forthcoming from 95 per cent of VNU shareholders. While Knight Vinke controls less than 2 per cent of the company, Fidelity commands just shy of 15 per cent.

Sources close to the consortium declared the cash offer of €28.75 a share fair and suggested no increase was likely. It is up to VNU to persuade shareholders of the merits of the deal, the source said. A meeting with shareholders to discuss the offer is slated for 18 April, the day of VNU's annual meeting.

VNU, the world's biggest market research firm with 38,000 workers, makes about three-quarters of its money in America. It owns the ACNielsen market research businessand trade magazines including Billboard and The Hollywood Reporter. In the UK, VNU owns specialist magazines including Accountancy Age and Computing, and runs an events organising business from its London office.

Rob van den Bergh, VNU's outgoing chief executive, said: "We would have liked to stay independent but sometimes life goes a little different. I think we got a good price, but the shareholders have the last word.... More is not there."

Knight Vinke was among a group of investors instrumental last year in forcing VNU to abandon plans to buy IMS Health, an American market research company, for $7bn (£4bn). The implosion of that deal left the Dutch group vulnerable to potential predators, cost Mr van den Bergh his job and strained relations with several shareholders.

Separately, VNU reported that core earnings edged 2 per cent higher to €587m in 2005.