Target: VNU N.V.
Price: $8.6 billion ($10.3 billion)
Buyers: AlpInvest Partners; The Blackstone Group; The Carlyle Group; Hellman & Friedman; Kohlberg Kravis Roberts & Co.; Thomas H. Lee Partners
Seller: VNU Shareholders
Financial Advisors: Seller: Credit Suisse Group; N.M. Rothschild & Sons Ltd.; Evercore Partners; Buyers: ABN AMRO; Citigroup Inc.; Deutsche Bank; ING Group; J.P. Morgan Chase & Co.
Legal Counsel: Buyers: Clifford Chance LLP and Latham & Watkins LLP; Seller: Simpson Thacher & Bartlett LLP; De Brauw Blackstone Westbroek NV
The buyers, operating through a holding company called Valcon Acquisition B.V., agreed to acquire the Haarlem, Netherlands-based owner of Nielsen Media Research for ?28.75 per share. The combined price tag of the transaction is ?8.6 billion ($10.3 billion), including the assumption of debt.
Two other private equity firms, Permira and Apax Partners, had belonged to the consortium but dropped out. A source with knowledge of the deal said Permira stepped aside once the price got too high, while an Apax spokeswoman declined to comment on the matter. The buying consortium declined comment through a spokesman, as well.
The agreed-to purchase price represents a multiple of 13.4x VNU’s 2005 EBITDA, which the company’s supervisory board concluded was a value in the best interests of the company’s shareholders. A statement from VNU calls the multiple “an attractive valuation” compared with the recent trading of peer companies such as McGraw-Hill and others.
But not all agree with that. In a research report, Citigroup CFA Thomas Singlehurst expressed that the proposed bid at ?28.75 per share undervalues the company and that investors should push for a purchase price of ?31 per share.
Furthermore, Singlehurst questioned the need for VNU to sell in the first place. “There is nothing private equity can do (releverage, asset disposals, cost savings) that existing management, correctly incentivised, could not (at least partially, in the case of leverage) do themselves,” he said.
VNU is active in more than 100 countries and employs nearly 41,000 people. Last year the company posted ?3.5 billion in revenues.
The consortium said it intends to capitalize on those strengths by keeping VNU “together as an integrated company” while pursuing improvements in operational efficiency and investing in product development and innovation.
Rob van den Bergh, CEO of VNU, is expected to step down from his position upon the closing of the transaction, which is slated for sometime in May. ABN AMRO, Citigroup Inc., Deutsche Bank, ING Group and J.P. Morgan Chase & Co. will provide financing.