VNU accepts $10.3 billion buyout offer from private equity consortium

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New York—Ending nearly two months of speculation, Anglo-Dutch media giant VNU on Wednesday said it has accepted a sweetened $10.3 billion offer from a consortium of private equity firms. The deal, which includes $9 billion in cash and assumption of another $2.3 billion in debt, still requires shareholder approval.

VNU said in a statement that the consortium plans to keep the company intact, but analysts have said that investors may push the company to break itself up instead.

VNU owns market researcher ACNielsen as well as a large portfolio of trade magazines, including Billboard and The Hollywood Reporter. Some shareholders have pressed for a breakup of the company into separate units for media metrics, ACNielsen and publishing.

Reed Phillips, a partner in the media investment bank DeSilva & Phillips said the deal was unique. “Usually, the traditional approach for private equity firms is to buy portions of a company and create value out of the assets,” he said. “So it’ll be interesting to see how the consortium creates value. One way to do that is to sell parts of the business or go in a new direction.”

Phillips said that if the consortium were to keep the b-to-b publishing division, VNU would be less appealing to potential buyers within the next five years—the time frame in which a private equity buyer would typically try to “flip” a company. That’s because a b-to-b trade publication portfolio “requires a different strategy” in an increasingly digital age, he said.

VNU went into play after its failed bid late last year to acquire health care research company IMS for nearly $7 billion.

The private equity consortium is made of AlpInvest Partners, Blackstone Group, Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co. and Thomas H. Lee Partners. Permira Advisers pulled out last month.

VNU said in a separate statement Wednesday that net income in 2005 rose to $305 million, from $293 million a year earlier. Revenue rose 5% to $4.1 billion.

—Matthew Schwartz

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