IMS deal dead, VNU retools

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As VNU scrambles to get its financial house in order following the collapse of its planned $6.9 billion acquisition of U.S. pharmaceutical research company IMS Health, rumors persist in the b-to-b media world that VNU itself may be a takeover target.

The IMS deal, first announced in July, collapsed in mid-November after shareholders who claim to control 50% of VNU's outstanding shares said they would not agree to a deal under any circumstances.

As part of a reorganization plan, VNU said it would return $1.17 billion to shareholders in the form of buybacks and additional dividends and that CEO Rob van den Bergh would step down after a successor is found. In addition, VNU will reimburse IMS $15 million for costs related to the scuttled deal 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.

Van den Bergh's departure could pave the way for a takeover, industry observers said. "When you have a public misstep by the CEO like this, it raises questions about shareholder value," said Joel Novak, managing partner at media investment bank Berkery, Noyes & Co. "Unhappy shareholders almost always means that someone will step up, offer an attractive valuation and then the company is in play."

In an interview with The Wall Street Journal a day after the deal collapsed, Van den Bergh said VNU is not for sale and that it wouldn't sell any of its three main units: the Nielsen television rating service, ACNielsen market research and the Business Information division, which includes Billboard, Hollywood Reporter and National Jeweler among dozens of b-to-b publications.

Will Thoretz, a VNU spokesman, told Media Business that 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.

Industry observers were reluctant to speculate on where VNU goes from here.

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

"I'd be surprised if it's bought outright," Phillips said, adding that no decision will 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 as its new CEO, Phillips said.

Novak said VNU shareholders had been less than pleased with VNU's integration of the Nielsen Media Research television ratings services, so they put the brakes on the IMS deal even though conceptually it made sense. He scoffed at the notion that a VNU fire sale may be in the works. "It's a fine company with fine properties and can command a high price if it's put in play," he said. 

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