VNU is in play after receiving a combined bid from seven private equity firms, who now seem to be hunting for their prey in packs. The total amount of the bid, $8.8 billion, is not too big for one or two of them to take on, so the arrangement is likely a risk-sharing move, with no one of the players confident of being able to take on the company and resell it five to seven years down the line. The bidders are Kohlberg Kravis Roberts & Co., AlpInvest Partners NV, The Blackstone Group LP, The Carlyle Group, Hellman & Friedman LLC, Permira Advisers Ltd., and Thomas H. Lee Partners LP.
Much was already known here, including that PE firms were working on a bid, "activist" shareholders had put the company in play, and VNU hadn't responded and already had a project underway to value the components of the company.
Outsell's Chuck Richard highlights the noteworthy aspects of this proposed deal:
- Some accounts have suggested that VNU's B2B division would be spun off, but that speculation is not yet informed by any facts. Previously in OutsellNow we have discussed the lack of significant integration of the B2B unit with VNU's market research businesses.
- The price is too low to be accepted as offered and will have to be increased. It offers no meaningful premium over VNU's current market cap.
- The only drama is whether the PE firms will raise the bid high enough to get activist shareholders to vote their shares over to the bidders. And given that it took seven PE firms to make the bid, that might get exciting as they fight to keep their purchase price down and shareholders hold out for a premium making it worth their while to vote Yes.
- VNU has been diligent in working to grow its electronic revenues, but it doesn't have the kind of mass or coveted audiences that would tempt strategic buyers to move in with topping bids. The most likely scenario involving strategic buyers such as Reed Elsevier, CMP, or IDG would be if the PE firms did choose to resell the B2B unit to them to focus on the market research businesses.