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With IMS deal dead, VNU starts to regroup

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All bets are off.

Now that its planned $6.9 billion merger with U.S. pharmaceutical research firm IMS Health has been officially terminated, VNU has to get its own house in order before it can embark on a new business strategy, industry observers say.

The proposed merger, first announced in July, collapsed earlier this month after shareholders claiming to control 50% of VNU’s outstanding shares said they would not agree to a merger under any circumstances. One casualty of the failed merger effort: VNU CEO Rob van den Bergh, who said he will step down after a successor is found.

As VNU starts to regroup, rumors continue to swirl throughout the b-to-b media world that the company itself may be in play or, at the least, may have to unload some of its assets to appease shareholders who for months have been clamoring for change. The company’s assets include the Nielsen Media Research TV ratings services, as well as Billboard, Hollywood Reporter and National Jeweler, among dozens of other trade titles.

Will Thoretz, a VNU spokesman, said the company has “no plans” to sell off its b-to-b division. “The [portfolio] is a valuable part of VNU, and we have many products in trade pubs, e-media and trade shows that have leading market positions,” he said.

Bob Crosland, managing director at media investment bank AdMedia Partners, said there’s no telling what VNU is now going to do. “They need a new CEO to come in and craft a vision that is acceptable to both the board of directors and the shareholders,” he said.

The $1.17 billion VNU has said it will return to its shareholders as part of the termination agreement with IMS Health is certainly a start toward assuaging their concerns. In addition, VNU will reimburse IMS $15 million for its costs related to the proposed merger and pay an additional $45 million to IMS should VNU itself be acquired within the next year. IMS will pay VNU $15 million should it be acquired.

VNU said it will focus on increasing shareholder value through more cost-cutting initiatives and “enhancing” existing lines of business. It will also pursue a listing on the New York Stock Exchange to raise its profile and expand its shareholder base.

Reed Phillips, a founding partner in media investment bank DeSilva & Phillips, said that after VNU gets its fiscal house in order the collapse of the IMF deal will end up being just a hiccup, and he speculated that the company will ultimately stay intact.

“I’d be surprised if it ‘s bought outright,” Phillips said, adding that no decision is likely to be made on the company’s future strategy until a successor to Van den Bergh is named. Things may take even longer if the company chooses an outsider to be the new CEO, he said.

Asked if there was the potential for a hostile takeover, Phillips said that was doubtful. “A lot of buyers like to do things on a friendly basis,” he said. “There’s also the question of whether they have a poison pill,” a strategy designed by corporations to discourage a hostile takeover.

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