Private equity firms offer $8.8 billion to buy VNU

TSE STAFF
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Haarlem, The Netherlands – VNU announced January 16th  that it is in discussions with a group of the world’s largest private equity firms which have offered to buy the company for as much as $8.8 billion  (7.3 billion Euros). The consortium consists of AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co., Permira and Thomas H. Lee Partners. Potential bidders were given limited access to VNU’s books earlier this month.

The offer amounts to 28 euros to 28.50 euros per share, an offer analysts call disappointing, according to Reuters Inc.  Expectations were for 29.50 euros to 31 euros per share. VNU has been courted  before by potential buyers and has rejected offers in the past. The company said that there is no assurance that these discussions will result in any specific transaction and, if so, at what price and with what conditions. VNU expects to  provide further information within three to four weeks.

Total revenues for VNU were 3.3 billion Euros in 2004. VNU will announce its full-year 2005 financial results March 8, 2006.

The company is currently valued at 23 times estimated 2006 earnings. Dutch competitor Reed Elsevier is valued at 16 times 2006 earnings.VNU’s market capitalization is about 7.2 billion euros and  the company expects to grow 5 to 6 percent in sales in  2005 . “Building on a strong first half, VNU turned in another solid performance over the last six months to close out the year in excellent shape,” said Rob van den Bergh, CEO.  “Our two largest groups – VNU Marketing Information and VNU Media Measurement & Information – are growing in response to strong demand for our consumer, media and market information services.  I am also quite pleased with the growth of our trade show business.” Trade show revenues in the U.S. are expected to be up about 10%, as the group launched 10 new events this year. VNU produces over 65 trade shows and events and publishes 140 publications in segments such as entertainment, food  and beverage, marketing and media, retail trade, real estate, travel, etc.  Some of its high profile brands include ACNielsen, Billboard magazine and  The Hollywood Reporter.

Greg Farrar is President of VNU Expositions, a division of VNU Business Media.