Dutch media company VNU, owner of Nielsen Media Research, agreed Monday to acquire U.S.-based healthcare data provider IMS Health Inc. in a cash and stock deal valued at $6.57 billion, marking one of the biggest consolidations in the growing industry of data collection.
The purchase, expected to close in the first quarter of next year, will be VNU's largest since buying the Nielsen television ratings provider in 2001. The joint company would have had an estimated revenue of $5.6 billion in 2004, VNU said.
"Together, we will be able to measure our clients' performance in three key sectors of the global economy -- consumer packaged goods, healthcare and media," said VNU Chief Executive Rob van den Bergh, who will be CEO of the combined company.
Connecticut-based IMS, which operates in the pharmaceutical and healthcare sector, sells clients information on how their products are used, and therefore matches the profile of other VNU units. The company earned $30.3 million on $411 million in sales in the first quarter, up 11% from a year earlier.
VNU, which also publishes trade magazines including Adweek and the Hollywood Reporter, said the purchase would boost its cash earnings per share in the first year and annual earnings before interest, taxes and depreciation.
VNU's shares fell 3.7% to $26.94, with some analysts saying VNU may have overpaid for IMS and could struggle to achieve projected annual synergies of $132 million by 2008. Shares of IMS rose 2.4%, or 61 cents, to $26.50.
"IMS is already lean and mean," which makes VNU's synergy estimates "very ambitious," said Hans Slob, an analyst at Rabo Securities.
VNU will offer IMS shareholders $11.25 a share in cash and 0.6 share of VNU stock, a 16% premium to IMS' average share price over the last 30 days.
As part of the deal, VNU said it would buy back as much as $600 million worth of its own shares and borrow $3 billion from several financial institutions to complete the transaction.
IMS said the deal would also include the assumption of $315 million in debt.
The deal would shift VNU's activities away from publishing to a virtually dedicated media research company in the United States. It reunites Nielsen and IMS, which were both previously owned by Dun & Bradstreet Corp. until it split in 1996.
VNU already generates more than half of its revenue in the United States, where it employs nearly 13,000.