While some may question why Valcon didn’t have a new CEO lined up at the time of take over, others say it was prudent not to. "There were two main reasons I felt that a CEO hadn’t been identified publicly — first, we all believed that the incoming CEO was someone employed elsewhere at the top levels of management," said Michael Alcamo, president of investment bank, M.C. Alcamo & Co. "Given that the bidding group needed 95 percent shareholder approval, that potential CEO couldn’t announce that he or she was leaving before it was clear that the bidders had the necessary 95 percent votes."
Alcamo says that directors’ duties in Dutch companies usually extend beyond shareholders to all stakeholders. "I suspect that Dutch law requires directors to consider the impact of their action on employees, creditors, and the Dutch community in general in some way," he said. "The bidding group therefore could not state that they planned to restructure the company or reduce headcount and have any hope of getting supervisory board approval, much less a 95 percent shareholder vote."
One source believes the company will not sell its magazines right away for several reasons. "Although they’ve suffered like a lot of other publications, overall it’s a good business," said the source. Under the terms of the sales contract, VNU wouldn’t be able to sell the magazines for at least 18 months, the source explained. "And they wouldn’t want to because the tax implications would be onerous," the source added.
Alcamo says that 18-month stipulation may also prevent the company from undertaking any big changes, aside from personnel changes, in the immediate future. "My guess is that a significant restructuring will commence in about 18 months and one week," he said.
Changes also are in store for the company’s publishing business, VNU Business Media, which accounted for a little less than 18 percent of VNU’s $3.5 billion revenue in 2005. One source says VNU is exploring how it can use people more efficiently and that VNU Business CEO Michael Marchesano, who is the chairman of American Business Media’s executive committee, might be asked to play a bigger role in the corporation.
Alcamo said some of the division’s publications may be sold or spun off, as well. "It has always been anticipated that the private equity buyers wanted to get their hands on A.C. Nielsen," he said. "We always thought the buyers viewed the rest of the company as ancillary and that those other assets (would) be sold or spun off to shareholders. The publishing assets range from Kitchen and Bath Business to Billboard magazine, and I am guessing that one day we will hear that ‘non-core assets’ will be spun off or sold to other private equity buyers."
VNU Business Media currently publishes 45 business publications, including Adweek, Billboard and Editor & Publisher magazines; 17 directories, stages 70 events and conferences and 65 trade shows, and operates 165 eMedia products (enewsletters and Web sites). VNU’s business information division taking in revenues of about $618 million and EBITDA of $109 million. Bill Mickey Contributed to this Story.