IMS playing it cool on VNU merger
While Nielsen parent VNU has publicly acknowledged that its seven billion bucks merger acquisition of IMS Health is in trouble (11/8/05 TVBR #219), the about-to-be-jilted bride is keeping silent, at least publicly. Since it is VNU's big shareholders who want to kill the deal, not anyone on the IMS side, IMS management is reportedly holding out to have its costs reimbursed before agreeing to walk away from the deal. IMS did, however, file with the SEC this internal email that IMS CEO Dave Carlucci sent to all employees last week:
Message from Dave Carlucci: VNU Merger
To: All IMS Employees
From: Dave Carlucci, CEO and President
Date: November 8, 2005
Subject: VNU Merger
Dear Colleague,
There have been several news accounts this week regarding the status of our proposed merger with VNU - - specifically, assertions of opposition by VNU's major shareholders to the transaction. We will keep you posted on any developments as they take place.
While the merger with VNU offers a compelling opportunity for our business, IMS remains very well-positioned to continue meeting our clients' needs and building shareholder value. As our latest financial results demonstrate, our business remains strong and is getting stronger - - thanks to your energy and determination.
I know that these developments can be distracting, and want to thank you for keeping your focus on delivering the service and value our clients expect. I appreciate your commitment to our business and each other, and your continued support as we build a bright future for our company.
- - Dave
TVBR observation:
To some extent, IMS has VNU over a barrel. If VNU management bows to the wishes of its major stockholders and withdraws its endorsement of the merger, the contract with IMS requires VNU to pay a 125 million breakup fee - - something neither VNU management nor its big shareholders want to see happen. So, VNU management is continuing to say it supports the merger, even as it negotiates how to get out of it. It could let the merger go to a shareholders vote, but then it would face the embarrassment of having its "yes" recommendation rejected by shareholders, who would almost certainly register a "no" majority, making the tenure of VNU CEO Rob van den Bergh even more tenuous. On the other hand, he could further agitate already angry shareholders by agreeing to pay IMS anything to scuttle the merger.
Or, maybe just maybe someone inside VNU can come up with a fresh business plan for 2006 that refocuses the assets of VNU and outlines a more manageable media company. VNU has a ton of money invested in LPM and best stay focused. Just see RBR - Radio News on the 'First-ever Advertiser/Agency Advisory Council' meeting and learn from it because it doesn't get any better. Last, will someone inside VNU/Nielsen email TVBR to VNU overseas and maybe this will sink in what has to be done.
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