Dutch publishing company VNU NV, owner of the Nielsen’s TV ratings service, called off its planned $6.8 billion takeover of U.S. health care data provider IMS Health Inc. on Thursday due to opposition from major VNU shareholders and said its chief executive would resign.
The deal had been in doubt since early October, when a group of large investors said the acquisition was too risky and too expensive and said they would refuse to endorse it.
VNU Chief Executive Rob van den Bergh will step down as soon as a suitable replacement can be found, the company said.
“We believe there was a compelling business rationale for combining VNU and IMS that would have resulted in a stronger company and increased shareholder value over the longer term,” Van den Bergh said. “However, having heard the views of our shareholders, it became clear that it would not be possible for us to proceed.”
IMS is known for its market research in the pharmaceutical industry, while VNU is known for providing retailers and media market information via Nielsen’s ratings for television and Internet. It also publishes trade magazines such as Billboard and Hollywood Reporter.
VNU said it will pay a termination fee of $15 million to Connecticut-based IMS, and aid it had agreed to pay IMS an additional $45 million in the event VNU is acquired in the next year. It also plans to return 1 billion euros ($1.17 billion) to its shareholders, split about equally between a share buyback and extraordinary dividend.
VNU’s shares rose 2 percent to 26.87 euros ($31.40) by midday in trading in Amsterdam after rising as much as 5 percent earlier in the day.
The company, which has half its sales in the United States, said it will seek a listing on the New York Stock Exchange.
Analyst Gert Potvlieghe of Dutch investment house Petercam said the breakup was “not really a surprise” but VNU’s saga is likely to continue as it is now a target for a breakup or takeover.
In a conference call, Van den Bergh declined to say whether private investors had approached VNU, but denied that the merger with IMS had been a defensive strategy for VNU to prevent being taken over itself.
“This proposed merger was for offensive reasons,” he said. “It was risky, but I did what I thought was best for the company.”
The IMS takeover would have nearly doubled VNU’s size.
The deal received a mixed reactions when it was announced in July. It appeared doomed from October, when shareholders Templeton Global Advisors, Fidelity Investments International and Knight Vinke Asset Management — together representing more than 40 percent of shares — went public with their opposition.
Analysts said there was some logic for the two companies to combine. But the benefits of an alliance would only have become apparent after a long and difficult integration and VNU had a mixed record under Van den Berg.
Van den Berg, 55, had a 25-year career with VNU, becoming chief executive in 2000. The company’s share price has declined more than 50 percent since then. The company has struggled to integrate Nielsen Media Research, which it bought for $2.7 billion in 1999.
Van den Berg said there was no shortlist of candidates for his replacement, and added that he was “not bitter” about being ousted.