VNU (Renamed Nielsen)
VNU (Renamed Nielsen)
Buyer: Valcon Acquisition B.V. Seller: VNU NV. Price: $11.1 billion. Date: June. Takeaway: One of the largest deals of the year has sparked fundamental changes for the publishing arm, VNU Business Media. Will the company respond or is this too much too fast?
No deal in 2006 offered as much public drama as the sale of VNU. The saga started in 2005 when VNU shareholders scuttled the company’s proposed $7 billion acquisition of healthcare information provider and consultant IMS Health Inc., prompting the resignation of CEO Rob van den Bergh and much "will-they-or-won’t-they" speculation about the company spinning off its publishing arm, VNU Business Media.
Then in January 2006, VNU received an $8.8 billion buy-out offer from a consortium of private-equity firms that include AlpInvest Partners N.V., The Carlyle Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co., Thomas H. Lee Partners L.P. and The Blackstone Group L.P., itself a backer of former Advanstar CEO Bob Krakoff’s new company, The Blantyre Group, which had made an unsuccessful bid for Advanstar Communications in 2005.
Analysts had expected a higher valuation for VNU and in March 2006, shareholder Knight Vinke stated opposition to the $8.8 billion deal that had been approved by the VNU board. In May, Valcon sweetened the pot to $11.1 billion and by June, the deal was done. VNU named David Calhoun, former vice chairman of General Electric as CEO and chairman of the executive board. The company formed a dual corporate headquarters in New York City and Haarlem, Netherlands.
The deal spurred massive changes for the new entity, particularly VNU Business Media. In August, former VNU Business Media president and CEO Mike Marchesano was promoted to "chief transformation officer" and Krakoff took over the division as CEO.
Backed by Calhoun, who sources say was critical of past VNU management as too risk-averse, Krakoff initiated a reorganization focused on market rather than media (an approach he pioneered while head of Advanstar) with six groups; Marketing, Film, Music, Retail, Residential and Commercial Building Design. The new structure eliminated VNU Expositions, VNU eMedia and Information Marketing as separate divisions. Several group presidents left the company and in December, VNU sold its Business Media Europe group to European private equity firm 3i. In January 2007, VNU changed its name to Nielsen for better market recognition.
The publisher now faces some major internal challenges, including the shedding of some 4,000 jobs as part of the restructuring, and ultimately reporting to five different PE bosses, including the notorious KKR, owner of Primedia.
Comments: Directionally they’re moving to where they need to go. But the proof will be in the pudding as to whether they’re cutting too deeply and have to start over again, as opposed to cutting just rightﾅThey are doing what most media companies need to do. They’re reducing their expenses on their print brands and investing those savings in online and they’re doing it simultaneously.