Shareholder revolt over €7.4bn VNU bid

VNU shareholder Knight Vinke Asset Management has reiterated its opposition to an offer from private equity consortium Valcon and has encouraged other shareholders to reject the bid in an AGM later this month.

VNU minority shareholder Knight Vinke Asset Management (KVAM) has announced that it intends to reject a private equity consortium’s offer for the Dutch business information group.
 
KVAM, which owns under two percent of VNU, said it intends to reject the €28.75 per share offer launched yesterday by Valcon Acquisition, a private equity consortium comprising AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts and Thomas H. Lee Partners.
 
Valcon’s offer values VNU at approximately €7.4 billion ($9 billion). VNU’s management accepted the offer in early March and has encouraged shareholders to follow suit. The offer period lasts until May 5.
 

Under new management and with a reconstituted board of directors, VNU is capable of generating substantially higher profits from its existing core businesses.

Knight Vinke Asset Management

KVAM said yesterday, however, that it intends to reject the offer and will encourage other shareholders to do likewise, instructing its proxy solicitor MacKenzie Partners to register shareholder opposition to the transaction. KVAM will also seek a seat on VNU’s supervisory board for its chairman and CIO Eric Knight in the event that a vacancy occurs at or prior to an AGM on April 18.
 
KVAM said it will reject the offer as neither it, nor any other shareholders to its knowledge, had requested a sale of VNU, especially as “under new management and with a reconstituted board of directors, VNU is capable of generating substantially higher profits from its existing core businesses”.
 
It added that Valcon’s offer undervalues VNU by “as much as €7 to €12 per share (ie. by 25 to 40 percent) and that there is no reason for VNU’s shareholders to relinquish this value to the private equity consortium”. The firm added that the offer price is “artificially inflated” by the removal of a final dividend.
 
The offer requires 95 percent agreement at the AGM later this month. KVAM said it is “astonished that the boards of VNU have agreed to recommend the offer and to commit to paying the private equity consortium a fee of €30 million in the event that the offer fails to obtain 95 percent acceptances – in the certain knowledge that far more than 5 percent of the shareholders have already responded in advance, in many cases in writing, that they would reject an offer of €28 to €28.50 (which is economically identical to the offer once one takes out the final dividend which the VNU shareholders are being deprived of)”.
 
KVAM is not the only minority shareholder thought to be opposed to the offer. Rob Ruijter, CFO at VNU, told The Financial Times last week that Fidelity Investments, which controls around 15 percent of VNU, is unlikely to support the consortium’s offer.