Filed pursuant to Rule 425 under the
Securities Act of 1933, as amended, and
deemed filed under Rule 14a-12 under the
Securities Exchange Act of 1934, as amended.
Filed by: |
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IMS Health Incorporated |
Subject Company: |
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IMS Health Incorporated |
Exchange Act File Number of Subject Company: |
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001-14049 |
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Global Leadership in Market Intelligence
Driving Growth through Innovation and Execution
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July 11, 2005
Safe Harbor
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This document contains certain forward-looking information about IMS Health Incorporated (IMS), VNU N.V. (VNU) and the combined company after completion of the transactions that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as expect(s), feel(s), believe(s), will, may, anticipate(s) and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of IMS and VNU, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include, but are not limited to: the failure of stockholders to approve the transaction; the risk that the businesses will not be integrated successfully or that doing so will be costly or result in significant charges; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; the results of the reconciliation of IMS financial statements into IFRS and the results of the reconciliation of VNUs results into U.S. GAAP; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; competition and its effect on pricing, spending, third-party relationships and revenues; the ability to obtain governmental approvals of the transaction on the proposed terms and schedule; the risk that VNU is not able to maintain its status as a foreign private issuer; risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks; to the extent the companies seek growth through acquisition, the ability of the companies to complete development of or to develop new or advanced technologies and systems for their businesses on a cost-effective basis; the ability to successfully achieve estimated effective tax rates and corporate overhead levels; competition, particularly in the markets for pharmaceutical information and audience measurement services; regulatory and legislative initiatives, particularly in the area of privacy; the outcome of pending legal and regulatory proceedings; leverage and debt service (including sensitivity to fluctuations in interest rates); compliance with covenants in loan agreements; the ability to obtain future financing on satisfactory terms; deterioration in economic conditions, particularly in the pharmaceutical, healthcare, media, information technology or other industries in which customers operate; and conditions in the securities markets which may affect the value or liquidity of portfolio investments. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Neither IMS nor VNU undertakes any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are also urged to carefully review and consider the various disclosures in IMS various reports with the Securities and Exchange Commission (SEC), including but not limited to IMS Annual Report on Form 10-K for the year ended December 31, 2004 and IMS Quarterly Reports on Form 10-Q for the quarterly period ending March 31, 2005, and VNUs Annual Report for the year ended December 31, 2004, which is available at the SECs Internet site (http://www.sec.gov).
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Transaction Disclosure
Additional Information and Where to Find It
This document may be deemed to be solicitation material in respect of the proposed merger of IMS and VNU. In connection with the proposed transaction, VNU and IMS will file a registration statement on Form F-4, including the preliminary joint proxy statement/prospectus constituting a part thereof, with the SEC. VNU and IMS will file a definitive registration statement, including a definitive joint proxy statement/prospectus constituting a part thereof, and other documents with the SEC. SHAREHOLDERS OF IMS AND VNU ARE ENCOURAGED TO READ THE DEFINITIVE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE DEFINITIVE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final joint proxy statement/prospectus will be mailed to stockholders of IMS and VNU. Investors and security holders will be able to obtain the documents free of charge at the SECs web site, www.sec.gov, from IMS Investor Relations at 1499 Post Road, Fairfield, CT, 06824 or from VNUs Investor Relations at Ceylonpoort 5-25, 2037 AA Haarlem, The Netherlands.
Participants in Solicitation
IMS, VNU and their directors and executive officers and other members of their management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding IMS participants is set forth in the proxy statement, dated March 23, 2005, for IMS 2005 annual meeting of stockholders as filed with the SEC on Schedule 14A. Information regarding VNUs participants is set forth in VNUs Annual Report for the year ended December 31, 2004. Additional information regarding the interests of IMS and VNUs participants in the solicitation of proxies in respect of the proposed transaction is included in the registration statement and joint proxy statement/prospectus filed with the SEC.
Regulation G Legend
This presentation may contain certain non-GAAP financial measures. Reconciliations between certain non-GAAP financial measures and the GAAP financial measures will be made available in the joint proxy statement/prospectus. VNU figures have been prepared in accordance with Dutch GAAP and IFRS. IMS figures are prepared in accordance with U.S. GAAP. All pro forma consolidated financial information has been prepared by aggregating financial information based on these differing accounting standards and might be materially different if IMS figures were presented in accordance with Dutch GAAP or IFRS or if VNU figures were presented in accordance with U.S. GAAP. The definitive registration statement, including the definitive joint proxy statement/prospectus, may include adjustments to the financial statements of VNU to reflect differences between U.S. and Dutch GAAP and between the U.S. and Dutch approaches to financial statement presentation.
Strategic Overview |
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Rob van den Bergh |
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Innovation and Execution |
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David Carlucci |
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Integration and Synergies |
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Nancy Cooper |
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Financial Summary |
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Rob Ruijter |
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Summary |
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Rob van den Bergh |
Global Leadership In Market Intelligence
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Global leadership |
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The worlds leading marketing information, media measurement and business information company |
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The worlds leading provider of information and consulting solutions to the pharmaceutical and healthcare industries |
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Creating
and expanding growth
opportunities worldwide
Transaction Summary
Offer to IMS |
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$28.10 per share (1) |
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Shareholders: |
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$11.25
in cash |
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Transaction Value: |
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$6.6 billion (5.5 billion) equity value; $7.0 billion (5.8 billion) enterprise value |
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Resulting Ownership: |
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65% VNU / 35% IMS shareholders |
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Listing: |
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Euronext Amsterdam / NYSE |
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Key Combined Financial |
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CEPS
accretive in year 1 including synergies (2) |
(1) Based on closing price of VNU on July 8, 2005.
(2) Cash EPS defined as EPS before merger related and restructuring expenses and intangible amortization.
(3) Combined figures exclude synergies. VNU based on 2004 annual report (pro forma for divestiture of World Directories in 2004); IMS based on 2004 annual report. VNU financial figures in Dutch GAAP; IMS financial figures in U.S. GAAP. Pro forma financial figures presented might therefore be materially different if the companies financial information were presented in the same accounting principles.
Capitalizing on Major Trends
Demand |
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Clients increasingly demand intelligence, analytics and insights in addition to highest quality data |
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Global |
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Global presence, scale and capabilities |
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Need to |
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Need to understand consumer behavior continues to grow for all businesses |
Creating Shareholder Value
VNU |
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IMS |
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Adds high growth, highly profitable business |
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Broadens offering capabilities |
Accelerates development of consulting and services model |
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Expands and and
builds upon consulting and services |
Creates meaningful synergies |
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Facilitates expansion into new segments of healthcare |
Strengthens leadership team |
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Provides global scale benefits in key activities and processes |
Accretive to CEPS in year 1 including synergies (1) |
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Recognizes immediate and long-term value |
ROIC > WACC in 3-5 years |
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(1) Cash EPS defined as EPS before merger related and restructuring expenses and intangible amortization.
Transformation of VNU
Over the past seven years, VNU has transformed from a diversified publisher into a leader of market intelligence
1998 Business Mix |
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New Merged Company |
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Revenue: 2,427 ($2,900 million) (1) |
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Revenue: 4,680 million ($5,593 million) (1)(2) |
(1) Based on U.S.$ / exchange of 1.195 as of July 8, 2005.
(2) Combined figures exclude synergies. VNU based on annual report (pro forma for
divestiture of World Directories in 2004); IMS based on 2004 annual report.
VNU financial figures in Dutch GAAP; IMS financial figures in U.S. GAAP. Pro forma financial figures presented might
therefore be materially different if the companies financial information were
presented in the same accounting principles.
Merged Management Team
Supervisory Board
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Executive Board
CEO
Rob van den Bergh
Business Information
HR
Legal
Chief Transformation Officer |
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Deputy CEO and COO |
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CFO |
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Nancy Cooper |
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David Carlucci |
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Rob Ruijter |
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IT |
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Marketing Information |
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Corporate Controlling |
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Corporate Development |
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Media Measurement & Information |
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Treasury |
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Integration |
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Healthcare Market Intelligence |
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Investor Relations |
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Tax |
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Strategic Overview |
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Rob van den Bergh |
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Innovation and Execution |
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David Carlucci |
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Integration and Synergies |
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Nancy Cooper |
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Financial Summary |
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Rob Ruijter |
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Summary |
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Rob van den Bergh |
Global Leader in Market Intelligence
Marketing |
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Healthcare |
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Media |
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Business |
Information |
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Market |
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Measurement & |
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Information |
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Intelligence |
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Information |
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1.8B ($2.2B)(1) |
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1.3B ($1.6B)(1) |
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0.9B ($1.1B)(1) |
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0.6B ($0.7B)(1) |
27,000 employees |
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6,400 employees |
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8,800 employees |
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2,600 employees |
110 countries |
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105 countries |
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60 countries |
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11 countries |
Market leadership in strong industries
Combining capabilities to create new opportunities
Capitalizing on consulting and services model
Ability to offer clients global reach
Common business processes
(1) Denotes 2004 revenues.
Global Clients Trust VNU and IMS
[LOGO]
VNU & IMS clients have common business issues
Optimizing their return on investment
Expanding in the global marketplace
Responding to heightened consumer influences
Operating in highly competitive environments
Overview of IMS
Worlds leading provider of market intelligence to the pharmaceutical and healthcare industries
$1.6 billion in revenues for 2004
Over 60% of revenues outside U.S.
More than 6,000 employees in over 100 countries
Tracks over 1 million brands, daily
[LOGO]
IMS Strategy for Growth
Invest in Data and Analytics
Accelerate Growth in Consulting and Services
Develop New Markets and Audiences
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IMS: A Strong Global Franchise
Leadership Position
#1 Global Market Position
Strength of Client Base
Global Scale and Coverage
Financial Model
Strong Revenue Growth
High Free Cash Flows
High Return on Invested Capital
Strong EBITDA Margins: 33%
Reported Revenue Growth
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Adjusted EPS*
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Free Cash Flow
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* From continuing operations without Cognizant Technology Solutions
Broad Capabilities for Growth
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Marketing |
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Healthcare Market |
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Media Measurement |
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Information |
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Intelligence |
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& Information |
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Consumer Products |
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Healthcare |
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Media |
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Market |
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Consumer goods tracking Consumer behavior and attitudes Demographics |
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Prescription and over-the-counter tracking Doctor behavior and prescriptions Therapeutic class insights |
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Media ratings TV, Internet Advertising spending Box office Product placement |
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Consulting & |
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Promotional effectiveness Business intelligence Marketing mix optimization Launch management |
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Promotional effectiveness Pricing and reimbursement Launch and brand management Sales force effectiveness |
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Promotional effectiveness Advertising effectiveness Media planning |
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Example: Product Manager of OTC Antihistamine
Assess market share performance and promotional effectiveness
VNU: Front of Store |
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IMS: Back of Store |
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Over-the-counter market share |
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Prescription market share of antihistamines |
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Over-the-counter promotional spending |
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Prescription promotional spending |
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Consumer impressions |
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Direct-to-consumer effectiveness |
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Demographics |
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Integrated view of market share and promotional spending for prescription and over-the-counter products
Example: PharmaBrand Executive
Launch of new chronic-care, patented ethical drug
VNU: The Consumer |
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IMS: The Physician |
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Product perceptions |
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Product efficacy |
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Forecasting acceptance |
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Pricing and reimbursement strategy |
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Pricing sensitivity |
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Physician attitudes |
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Promotion response |
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Prescription share tracking |
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Consumer awareness |
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Integrated view of patient and physician dynamics in successfully launching prescription products
A Compelling Combination
Dramatically enhances value to our existing clients
Expands consulting and services
Benefits from common business processes
Creates significant opportunities for new audiences and new markets
Capitalizes on trends in the marketplace
Strategic Overview |
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Rob van den Bergh |
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Innovation and Execution |
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David Carlucci |
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Integration and Synergies |
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Nancy Cooper |
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Financial Summary |
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Rob Ruijter |
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Summary |
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Rob van den Bergh |
Disciplined Approach to Integration
Implement a new approach
Create global processes to improve business performance
Assign functional and regional leaders
Staff to achieve results
Taking advantage of joint experience
to deliver results
Integrating assets across all businesses
Build repeatable consulting and services capabilities
Deliver revenue and cost synergies
Integrating the Businesses
Common Processes |
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Data Assets |
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Data can be used across businesses |
IT / Production |
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Acquisitions |
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Consulting adds to value propositions |
Consulting and Services |
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Client Coverage |
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Common processes can be utilized |
Infrastructure |
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Data can be Used Across Businesses
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Marketing |
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Healthcare Market |
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Media Measurement |
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Information |
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Intelligence |
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& Information |
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Consumer Products |
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Healthcare |
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Media |
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Combine Over-the-Counter + Prescription Data |
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Combine Doctor + Consumer Panels |
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Market Information & Analysis |
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Combine Doctor + Consumer Panels + Media Ratings |
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Integrate BASES Forecasting Tool |
Consulting Adds to Value Propositions
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Marketing |
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Healthcare Market |
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Media Measurement |
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Information |
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Intelligence |
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& Information |
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Consumer Products |
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Healthcare |
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Media |
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Comprehensive therapeutic class view |
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Broader view of prescription decision drivers |
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Consulting & Services |
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Direct-to-Consumer advertising effectiveness and ROI |
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Drug launch forecasting and resource allocation |
Synergy Overview
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Data Across Businesses |
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Expansion of Consulting & Services |
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Revenue |
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125M |
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New Customer Opportunities |
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($150M) |
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Geographic Depth |
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Regional |
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85M |
Cost |
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Corporate |
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($100M) |
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IT / Production |
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EBITDA |
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110M |
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($130M) |
Note: Represent synergies expected be realized by year 3.
Strategic Overview |
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Rob van den Bergh |
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Innovation and Execution |
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David Carlucci |
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Integration and Synergies |
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Nancy Cooper |
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Financial Summary |
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Rob Ruijter |
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Summary |
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Rob van den Bergh |
VNUs Merger with IMS: Consistent with Criteria
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[LOGO] |
Strategic |
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Be a leader in marketing and media information |
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Strong strategic fit with existing businesses: non-cyclical, recurring revenue businesses |
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Focused, high-growth company with leading positions |
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Financial |
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Expected to be accretive to cash EPS in year 1 including synergies(1) |
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Return on invested capital on cash-on-cash basis in excess of WACC within 3 - 5 years |
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Significant opportunity for value creation with positive NPV based on conservative, market tested assumptions |
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Maintain EBITDA to Net Interest Expense within 6.0x - 8.0x(2) |
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(1) Cash EPS defined as EPS before merger related and restructuring expenses and intangible amortization.
(2) Based on Dutch GAAP; IFRS metric under review.
Attractive Geographical and Business Mix of Combined Company
2004 Revenue by Geography |
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2004 EBITDA By Business |
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4,680MM ($5,590MM) |
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1,080MM ($1,295MM) |
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EBITDA Margin: 23% |
Source: VNU based on 2004 VNU annual report (pro forma for divestiture of WD); IMS based on 2004 IMS annual report. VNU financial figures in Dutch GAAP; IMS financial figures in U.S. GAAP. Pro forma financial figures presented might therefore be different if the companies were presented in the same accounting principles.
Transaction Value and Implied Multiples
(Amounts in millions, except per share data) |
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Offer Price per Share |
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23.52 |
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28.10 |
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Diluted Shares Outstanding |
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233.7 |
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233.7 |
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Equity Value |
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5,496 |
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$ |
6,567 |
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Net Debt (3/31/05) |
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264 |
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315 |
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Minority Interest |
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84 |
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100 |
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Transaction Value |
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5,844 |
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$ |
6,982 |
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Transaction Value / 2005E IMS EBITDA ($560MM - $580MM)(1) |
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12.0x - 12.5x |
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Offer Price/2005E IMS Adjusted EPS ($1.29 - $1.35)(1) |
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20.8x 21.8x |
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Note: Based on exchange rate of $1.195 per 1.00. Diluted shares based on treasury stock method.
(1) 2005E EBITDA based on equity research consensus; 2005E adjusted EPS based on IMS management guidance. Adjusted EPS from continuing operations, adjusted for legal fees, gains from investments and tax provisions.
Financing Plan and Capital Structure Implications
Approximately 60% of consideration in VNU equity; 40% in cash
136.4 million new VNU shares issued
2.1 / $2.5 billion total cash consideration to IMS holders
Net Debt at closing of approximately 3.3 billion, or 2.8x 2005E pro forma EBITDA
Pro forma EBITDA to Net Interest Expense to remain within 6.0x 8.0x under Dutch GAAP
Stock repurchase program of up to 500 million
Company is targeting to be below 3.0x Net Debt / EBITDA on an ongoing basis
Dividends will be at least equal to existing policy
Reporting in IFRS with U.S. GAAP reconciliation
Trading on Euronext Amsterdam and NYSE with a full ADR listing
Summary of Financial Combination Benefits
Annual revenue synergies target of at least 125 million ($150 million) by year 3
Expect approximately 20% weighted average EBITDA margin, or 25 million ($30 million) in EBITDA
Annual cost synergies of at least 85 million ($100 million) by year 3, approximately one third realized in year 1
Effective tax rate expected to be in the mid-20% range in the coming years
One-time cost of up to 150 million ($180 million) in 2006/2007 in connection with merging operations
Estimated Timeline to Completion
September: |
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File merger proxy with SEC |
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October November: |
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File offering documents with AFM |
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September December: |
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SEC/AFM review period |
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Hart-Scott-Rodino, EU and other regulatory review period |
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Q1 2006: |
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Shareholder vote for each of IMS and VNU |
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Close transaction |
Strategic Overview |
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Rob van den Bergh |
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Innovation and Execution |
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David Carlucci |
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Integration and Synergies |
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Nancy Cooper |
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Financial Summary |
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Rob Ruijter |
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Summary |
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Rob van den Bergh |
A Global Leader
Leader in market intelligence in three key industries:
Consumer Packaged Goods
Healthcare
Media and Entertainment
Compelling business model
World-class leadership team
Creating shareholder value
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