Nielsen owner to buy data provider
VNU NV's deal to acquire IMS Health Inc. marks one of the biggest consolidations in the data collection industry.
Published July 12, 2005
AMSTERDAM, Netherlands - Dutch media company VNU NV, owner of Nielsen Media Research, agreed Monday that 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 deal, 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 during the past 30 days.
As part of the deal, VNU said it will buy back as much as $600-million worth of its own shares and borrow $3-billion from several financial institutions to complete the transaction.
IMS said the deal would 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.
Nielsen Media Research has a large presence in Pinellas County, including an $80-million campus in Oldsmar that opened in 2003. It employs about 4,000 people in the Tampa Bay area.
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 publishes trade magazines such as Adweek and the Hollywood Reporter , said the deal 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.
Profit growth prospects are good, Westeneng said, and he will maintain an "add" rating on the stock.
But VNU's shares fell 3.7 percent to close at $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, on Monday to close at $26.50 on the New York Stock Exchange.
[Last modified July 12, 2005, 01:26:22]
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