REPORT OF THE EXECUTIVE BOARD
VNU continued to deliver solid top-line growth, with most businesses performing well.
approved by the Executive and Supervisory Boards of VNU and the Board of Directors of IMS, was expected to close in the first quarter of 2006. However, on November 17, 2005, the two companies agreed to terminate the planned merger as a result of opposition from shareholders claiming to represent nearly 50% of our outstanding shares. The merger would have required approval from a majority of shareholders to be completed. Under the terms of the termination agreement, VNU agreed to reimburse IMS USD 15 million for its actual out-of-pocket costs, and to pay an additional USD 45 million to IMS should VNU be acquired pursuant to any agreement entered into within the next 12 months. For its part, IMS agreed to pay VNU USD 15 million should IMS be acquired pursuant to any agreement entered into within the next 12 months. VNU and IMS still expect to work together cooperatively to develop joint revenue initiatives that were identified during the merger planning process. Agreement on Public Offer On March 8, 2006, VNU and Valcon Acquisition bv announced that they have agreed to a public offer for VNU that values the company’s equity at EUR 7.5 billion, or EUR 28.75 per common share and EUR 13.00 per 7% preferred share. Valcon is controlled by a private-equity group consisting of affiliated funds of AlpInvest Partners nv, The Blackstone Group lp, The
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Carlyle Group, Hellman & Friedman llc, Kohlberg Kravis Roberts & Co. lp and Thomas Lee Partners, lp. Before agreeing to the public offer, the Supervisory and Executive Boards of VNU considered a number of alternatives, including remaining a stand-alone company while implementing a three-year program to achieve annualized cost-savings of EUR 125 million by 2008. The Boards also considered the risk-reward benefits of breaking up the company. After taking into consideration the opportunities and risks associated with remaining a stand-alone company, the substantial valuation and execution risks associated with a potential break-up, and the strategic, financial and social aspects of the proposed transaction, the Boards concluded that the offer from the private-equity group is in the best interests of VNU's shareholders and all other stakeholders. The Board members, supported by analysis and opinions from independent advisors including Credit Suisse and Evercore Partners (retained by the company) and NM Rothschild & Sons (engaged by the Boards), believe the all-cash offer fully reflects the fair value of the company and unanimously recommend that shareholders accept the offer. Project Forward In November 2005, VNU announced plans to expand current cost-management initiatives in its groups as part of a new, company-wide effort called Project Forward. Under Project Forward, we have identified opportunities to introduce changes