VNU picks up US publishing firm for dollars 220m: BPI purchase fulfils American dream

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The Independent Online
VNU, the Dutch publishing group, has fulfilled its ambition of becoming a leading player in the US with the dollars 220m acquisition of BPI Communications.

BPI publishes a range of business magazines mainly about the entertainment and media sectors, including Billboard, Hollywood Reporter and Ad Week. It has turnover of about dollars 130m. VNU's existing US activities focus on database publishing. Three-quarters of its total turnover, most of it in the Netherlands and the UK, stem from consumer titles. Analysts have therefore greeted the acquisition of BPI as complementing VNU's operations.

Constant Busch, VNU's finance director, indicated last month that it was looking for business publications and information services to make it less dependent on the highly cyclical consumer market. VNU had thought of buying Extel, the financial information company, from Britain's United Newspapers but withdrew its bid after deciding the asking price was too high.

Ton Gietman, an analyst at the brokers Van Meer James Capel in Amsterdam, said: 'BPI is a very good fit with VNU's operations. It makes good sense in terms of timing too, because of the economic upturn in the US.'

VNU has not made BPI's profits public, but has told analysts that its profit margins are much higher than its own, currently 9 to 10 per cent. It also says BPI is free of debt.

An analyst at BZW Nederland said: 'From what the company has told us, the financial terms are pretty favourable. They are buying at a price-earnings ratio of something like 13, which is reasonable for a rapidly growing business in this sector.' Mr Gietman has some reservations, however, saying it is impossible to judge the dollars 220m price without more information.

VNU is taking advantage of its own high share price to finance the deal through a rights issue worth around 540m guilders (pounds 184m), without a significant dilution in its expected earnings per share. Even so, concerns about dilution took its share price down 3 guilders to 176 guilders in Amsterdam.

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