Nielsen’s largest investor, the WindAcre Partnership, has come out against the proposed sale of the measurement giant and has significantly enlarged its holdings in recent days in an attempt to derail the deal. WindAcre vows it “will take steps to block the transaction” as it doubles its stake in Nielsen to 18.9%, up from its previous 9.61% holding, by snapping up more than 33 million shares in recent days.
The maneuver comes as WindAcre disclosed that “after careful consideration” the investment firm has “concluded that they oppose” a pending $16 billion go-private deal led by Evergreen Coast Capital Corp. – an affiliate of Elliott Investment Management – and Brookfield Business Partners. WindAcre vows it “will take steps to block the transaction” in a filing with the Securities and Exchange Commission. It says that will include buying more shares and rallying other Nielsen shareholders to reject the offer. In the SEC filing, WindAcre says that it has learned through a “reliable” third-party that despite its objections, the private equity consortium plans to go forward with the proposed transaction with what is known as “a scheme of arrangement.” That is a court-approved deal between a company and its shareholders that typically impacts stock owner rights.
Nielsen earlier said it expects to use such a mechanism in the U.K. courts. But under British law, a scheme of arrangement requires the approval of the holders of at least 75% in value of the shares voting on the transaction, with members of the acquiring consortium not eligible to vote their shares.
Nielsen and WindAcre have quickly fallen out in recent weeks. Nielsen rejected an unsolicited bid for the company last month explaining it agreed with WindAcre that the $25.40-per share offer “significantly undervalued” its worth. It said that the transaction would be “highly unlikely” to receive shareholder approval after WindAcre informed Nielsen that if it were to accept the proposal, WindAcre would gobble up enough shares to block shareholder approval of the proposed transaction.
It is a strategy now playing out after Nielsen embraced the subsequent $28-per share offer made by Evergreen and Brookfield. The Nielsen board voted unanimously to support the acquisition proposal, which represents a 10% premium over the consortium's earlier proposal and a 60% premium over Nielsen's stock price before the potential sale surfaced in early March.
“The board determined that this transaction represents an attractive outcome for our shareholders by providing a cash takeout at a substantial premium, while supporting Nielsen's commitment to our clients, employees and stakeholders," said Nielsen Chairman James Attwood.
The terms of the deal, however, give WindAcre plenty of time to maneuver and to buy up additional shares of Nielsen stock.
The transaction agreement provides for a 45-day "go-shop" period, during which Nielsen – with the assistance of its financial advisors, J.P. Morgan and Allen & Company, and its legal advisors – will actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative acquisition proposals. The go-shop period expires 45 days after Nielsen's entry into the transaction agreement. A competing bidder who makes a superior proposal would be liable for a $102 million – or one percent of equity value – termination fee that is payable by Nielsen if the ratings company terminates the transaction agreement with the consortium to accept the sweeter deal.
Whether WindAcre, which initially invested in the company in 2013, is angling for more money, or it truly wants to continue its investment in Nielsen is unclear. Snehal Amin, Managing Partner of WindAcre, said earlier that the firm believes Nielsen has a “unique and strategic position” as a “critical measurement infrastructure” that will only become more valuable with time.
“Advertisers need the truth about who is watching their advertising across all screens and all platforms, and only Nielsen One has the promise to deliver that,” said Amin. “Advertisers know that, and in the end they are the ones who decide what currency to use. We are confident it will be Nielsen One."
The transaction is subject to approval by Nielsen shareholders and regulatory permission. If all goes as planned, a closing in the second half of 2022 is expected. If Nielsen does get the sale across the finish line, the private equity consortium plans to take the company private.
“As a private company, Nielsen will be even better positioned to deliver the best measures of consumers' rapidly changing behaviors across all channels and platforms," said Brookfield Managing Partner Dave Gregory.
Shares of Nielsen stock fell one percent Monday during trading in New York.