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Dutch media company VNU to acquire U.S.-based IMS Health

3 min read

AMSTERDAM, Netherlands (AP) – Dutch media company VNU NV, the owner of Nielsen Media Research, agreed Monday it would acquire U.S.-based health care data provider IMS Health Inc. for a cash and stock deal valued at $6.57 billion, marking one of the biggest consolidations in the growing industry of data collection. The purchase, expected to close in the first quarter of next year, will be VNU’s largest since buying the Nielsen television ratings provider in 2001. The joint company would have had an estimated revenue of $5.6 billion in 2004, VNU said.

VNU, based in Haarlem, will offer IMS shareholders $11.25 per share in cash and 0.6 share of VNU stock, a 16 percent premium to IMS’ average share price over the past 30 days.

As part of the deal, VNU said it will buy back up to 500 million euros ($600 million) worth of its own shares and borrow 2.5 billion euros ($3 billion) from several financial institutions to complete the transaction.

IMS said deal would also include the assumption of $315 million in debt.

“Together, we will be able to measure our clients’ performance in three key sectors of the global economy – consumer packaged goods, health care and media,” said VNU Chief Executive Rob van den Bergh, who will be CEO of the combined company.

Connecticut-based IMS, which operates in the pharmaceutical and health care sector, sells clients information on how their products are used, and therefore matches the profile of other VNU units. The company earned $30.3 million on $411 million in sales in the first quarter, up 11 percent from a year earlier.

VNU, which also publishes trade magazines like Adweek and The Hollywood Reporter, said the purchase will boost its cash earnings per share in the first year and annual earnings before interest, taxes and depreciation.

“The takeover of IMS is strategically wise and a good completion to VNU’s current portfolio,” SNS Securities analyst Reinier Westeneng told Dow Jones Newswires. Westeneng said profit growth prospects are good and he will maintain an “add” rating on the stock.

But VNU’s shares fell 3.7 percent to close at 22.49 euros ($26.94), with some analysts saying VNU may have overpaid for IMS and could struggle to achieve projected annual synergies of $132 million by 2008.

“IMS is already lean and mean,” which makes VNU’s synergy estimates “very ambitious,” said Hans Slob, an analyst at Rabo Securities. The view was backed by analysts at Fortis bank, who said the deal seems too pricey and value destructive.

Shares of IMS rose 2.4 percent, or 61 cents, to close at $26.50 on the New York Stock Exchange Monday.

The deal will shift VNU’s activities away from publishing to a virtually dedicated media research company in the United States. It reunites Nielsen and IMS, which were both perviously owned by Dun & Bradstreet Corp. until it split in 1996.

VNU already generated more than half its revenue in the United States, where it employs nearly 13,000 staff.

The company will be listed on both the Euronext Amsterdam and the New York Stock Exchange.

AP-ES-07-11-05 1620EDT

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