Nielsen has rejected what it says was an “unsolicited” buyout offer from a private equity consortium. In a late-Sunday announcement, Nielsen’s board said that after conducting a review of the proposal with a group of independent financial and legal advisors, it concluded the $25.40 per-share offer “significantly undervalues” what it believes the ratings company is worth. That included adequately compensating shareholders for what it said are Nielsen's growth prospects.
"We continue to have strong confidence in the management team and Nielsen's strategy to create long-term value for shareholders," said James A. Attwood, chair of Nielsen’s board. "We are always open to exploring any avenue to create value for shareholders, but the board is in agreement with WindAcre, one of our largest shareholders, that the consortium's proposal significantly undervalues the company.”
Shareholders were already turning up their nose to the deal, despite its $9.13 billion cash offer plus the assumption of the company’s roughly $5 billion of debt. Nielsen says based on feedback from the WindAcre Partnership, one of the company’s largest shareholders, it determined that the transaction would be “highly unlikely” to receive shareholder approval. In fact, WindAcre, which initially invested in the company in 2013, informed Nielsen that, if it were to accept the proposal, WindAcre would gobble up enough shares to block shareholder approval of the proposed transaction.
"We do not believe the offer comes close to recognizing Nielsen's intrinsic value and we were not going to be forced out of our holding at this price,” said Snehal Amin, Managing Partner of WindAcre. “We intended to block the transaction, so that we could realize, in time, the intrinsic value of our investment. We believe strongly that the board made the right decision in the face of an inadequate offer, saving the company from months of distraction and instability resulting from an acquisition process that would eventually fail."
Based on Nielsen’s long-term prospects, Houston-based WindAcre says it believes the company’s stock has an intrinsic value of more than $40 per share.
WindAcre’s most recent disclosure filing with the Securities and Exchange Commission shows it has economic exposure to Nielsen through total return swaps with respect to approximately 51,914,900 shares, or 14.44% of Nielsen's ordinary shares, in addition to its 9.61% common ownership. Under U.K. law, a deal like the one proposed by the consortium requires approval of at least 75% in value of the shares voting on the transaction, with members of the consortium not eligible to vote their shares.
Nielsen did not identify the source of the offer. But it was previously revealed that the consortium was led by activist investment fund Elliott Management, which has owned a stake in Nielsen since 2018. Elliott has been pushing for a Nielsen sale for the past three years. In 2019, following Elliott's request that it explore a sale, Nielsen announced a spinoff of part of its business to create two separate public companies: the core media business, and Global Connect, a market-analytics operation that measures retail and consumer behavior, the latter of which it sold in 2021 for nearly $3 billion to private-equity firm Advent International Corp.
Not only did Nielsen’s board reject the consortium’s proposal, but it also said it plans to move forward with its previously approved $1 billion share repurchase plans to capitalize on what it believes is the value of the company that is “well in excess” of its current stock price. To date, Nielsen has not repurchased any shares under this authorization as it reviewed the buyout offer with the assistance of its independent financial and legal advisors. It now plans to begin buying back its stock after it reports first quarter earnings on April 21 when its trading window opens.
“Further reflecting our confidence in the company, we plan to commence share repurchases, which we expect to be an important element of our ongoing balanced capital allocation strategy,” said Attwood in his statement.