Merger Arbitrage Mondays: Nielsen Holdings To Be Taken Private
Summary
- Nielsen Holdings to be acquired by a private equity consortium led by Evergreen Coast Capital Corporation, an affiliate of Elliott Investment Management.
- We added Nielsen Holdings as potential deal in the works on March 14, 2022.
- Nielsen has a 45-day "go-shop" period, during which it can actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative acquisition proposals.
- Looking for more investing ideas like this one? Get them exclusively at Inside Arbitrage. Learn More »
JHVEPhoto/iStock Editorial via Getty Images
Merger activity increased significantly last week with six new deals announced and eight deals completed. There were 17 deals announced in the month of March, with a total value of $64.55 billion.
Nielsen Holdings (NYSE:NLSN)
Nielsen Holdings was founded in Netherlands in 1923 by Arthur C. Nielsen Sr., who has been credited for coining the business term "market share". Originally called the AC Nielsen Company, it was the first company to offer market research. The company was initially incorporated with the idea of selling engineering performance surveys, and in 1932, it expanded its business by creating a retail index that tracked the flow of food and drug purchases. Nielsen's retail index, the first of its kind, allowed companies to determine their 'share' of the market.
Back in the hustle-bustle days of the dot com bubble, I worked at a company in San Francisco that managed to carve a nice little niche for itself in the then emerging category of natural and organic food that Nielsen had decided not to track. Those were the days when Whole Foods, Wild Oats and Odwalla were independent companies.
Today, Nielsen Holdings operates as a measurement and data analytics company in over 100 countries, providing clients with data about what consumers watch (through programming, advertising) and what they buy (based on categories, brands, products) on a local and global basis and how those choices intersect.
Until five years ago, Nielsen controlled the majority share of its market and was considered to be the only game in town. Consumer behavior has been rapidly changing with technology that allows people to skip commercials while streaming shows on different media platforms. Nielsen now faces competition from other players like Comscore, iSpot and VideoAmp.
Nielsen's stock dropped from over $44 five years ago to as low as $13.85 in 2020 and more recently trading in the $17-$18 per share range. At the company’s Q4 investor presentation, Nielsen announced a $1 billion share repurchase plan and rolled out its “advancing our Nielsen One product roadmap,” an integrated, cross-viewership platform.
Nielsen ONE Product Roadmap (Nielsen Investor Presentation)
We added Nielsen Holdings as potential deal in the works on March 14, 2022, when The Wall Street Journal reported that a consortium of private-equity firms including Elliott Management was in advanced talks to buy the company for about $15 billion including debt. Nielsen's price after this announcement was $22.85. Elliott Management called for a sale of the company as far back as 2018.
On March 20, 2022, the Board of Directors of Nielsen Holdings determined not to proceed with an unsolicited acquisition proposal from a private equity consortium that valued the company at $25.40 per share. On March 22, 2022, Bloomberg reported that Elliott Investment Management and Brookfield Asset Management were weighing a sweetened bid for Nielsen after its Board rejected their previous offer.
On March 29, 2022, Nielsen Holdings entered into a definitive agreement to be acquired by a private equity consortium led by Evergreen Coast Capital Corporation, an affiliate of Elliott Investment Management, and Brookfield Business Partner together with other institutional partners for $28 per share in an all-cash transaction valued at approximately $16 billion, including the assumption of debt. The deal represents a 10% premium over the Consortium’s previous proposal and a 60% premium over Nielsen’s unaffected stock price as of March 11, 2022.
According to the agreement, Nielsen has a 45-day "go-shop" period, during which it can actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative acquisition proposals. Nielsen will have to pay the consortium a termination fee of $102 million if it accepts a superior proposal from a competing bidder.
Expected to close in the second half of the year, the transaction will also be subject to UK court approval pursuant to a scheme of arrangement.
SPAC Arbitrage
There were two new SPAC IPOs filed and two new SPAC combinations announced last week. One SPAC business combination was terminated last week.
- Artemis Strategic Investment Corporation (ARTE) and Logflex MT Holding Limited (doing business as “Novibet”), a technology-enabled operator, jointly announced that the companies entered into a definitive agreement for a business combination, whereby Artemis will merge into a new wholly-owned subsidiary of Novibet.
- Prime Blockchain, a diversified infrastructure provider for blockchain technology that owns and operates a portfolio of proprietary data centers and crypto assets mining operations in North America, and 10X Capital Venture Acquisition Corp. II (VCXA) announced the execution of a definitive Business Combination Agreement.
Weekly Spread Changes:
The table below shows weekly spread changes between March 25 and April 1, 2022.
| Symbol | Quote | Acquiring Company | Acquiring Company Quote | Current Spread | Last Week Spread | Spread Change Weekly | Deal Type |
|---|---|---|---|---|---|---|---|
| PTRS | 9.14 | OceanFirst Financial Corp. (OCFC) | 19.89 | 13.57% | 9.73% | 3.84% | Special Conditions |
| WLL | 81.83 | Oasis Petroleum Inc. (OAS) | 149.9 | 13.41% | 9.78% | 3.63% | Cash Plus Stock |
| PBIP | 16.41 | Fulton Financial Corporation (FULT) | 16.66 | 9.75% | 6.82% | 2.93% | Cash Plus Stock |
| EXTN | 6.28 | Enerflex Ltd. (ENRFF) | 8.08 | 4.94% | 3.03% | 1.91% | All Stock |
| MGP | 39.34 | VICI Properties Inc. (VICI) | 28.92 | 0.42% | -0.85% | 1.27% | All Stock |
| MBII | 1.1 | Bioceres Crop Solutions Corp. (BIOX) | 13.75 | 10.00% | 12.93% | -2.93% | All Stock |
| ATC | 22.63 | MKS Instruments, Inc. (MKSI) | 141.21 | 6.03% | 10.62% | -4.59% | Cash Plus Stock |
| AZPN | 166.96 | Emerson Electric Co. (EMR) | 98.42 | -4.17% | 1.36% | -5.53% | Special Conditions |
| SAFM | 190.42 | Cargill and Continental Grain Company (N/A) | 6.61% | 12.44% | -5.83% | All Cash | |
| JOBS | 60.27 | Garnet Faith Limited (N/A) | 1.21% | 12.86% | -11.65% | All Cash |
Deal Statistics:
| Total Number of Deals Closed in 2022 | 53 |
| Total Number of Deals Not Completed in 2022 | 3 |
| Total Number of Pending Deals | |
| Cash Deals | 45 |
| Stock Deals | 12 |
| Stock & Cash Deals | 9 |
| Special Conditions | 8 |
| Total Number of Pending Deals | 74 |
| Aggregate Deal Consideration | $699.18 billion |
New Deals:
- The merger of Neenah (NP) and Schweitzer-Mauduit International (SWM) for $1.18 billion in an all stock deal. Under the terms of the agreement, shareholders of Neenah will receive 1.358 shares of SWM common stock for each share of Neenah common stock owned.
- The acquisition of Plantronics (POLY) by HP Inc. (HPQ) for $3.3 billion or $40 per share in cash.
- The acquisition of Randolph Bancorp (RNDB) by Hometown Financial Group for $146.5 million or $27 per share in cash.
- The acquisition of LHC Group (LHCG) by Optum, a part of UnitedHealth Group for $6.2 billion or $170 per share in cash.
- The acquisition of Nielsen Holdings (NLSN) by Evergreen Coast Capital Corporation for $16 billion or $28 per share in cash. We added NLSN as a potential deal to the Deals in the Works section on March 14, 2022, and the price after the news of the potential deal came out was $22.85.
- The acquisition of Manning & Napier (MN) by Callodine for $137.1 million or $12.85 per share in cash.
Deal Updates:
- March 24, 2022: All regulatory conditions set forth in the Merger Agreement between GreenSky (GSKY) and The Goldman Sachs Group (GS) have been satisfied. The merger is expected to close on March 29, 2022.
- On March 29, 2022, Verso Corporation (VRS) received necessary approvals from the Nuclear Regulatory Commission and the Public Service Commission of Wisconsin to complete its previously announced merger with BillerudKorsnäs AB. The transaction is expected to close on March 31, 2022.
- On March 30, 2022, Republic Services (RSG) and US Ecology (ECOL) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended has expired.
- March 31, 2022: According to The Wall Street Journal, four U.S. senators sent a letter to the Federal Trade Commission citing concern about Microsoft’s (MSFT) proposed acquisition of Activision Blizzard (ATVI), saying the deal could undermine employees’ calls for accountability over alleged misconduct at the video game company.
- On March 31, 2022, Mimecast (MIME) received written notice from the Committee on Foreign Investment in the United States (“CFIUS”) that there are no unresolved national security concerns.
- On April 1, 2022, Atotech Limited (ATC) announced that it has agreed to extend the date for completing MKS Instruments (MKSI) pending acquisition of Atotech to September 30, 2022 from March 31, 2022. The extension is intended to allow additional time for the regulatory approval from China’s State Administration for Market Regulation (“SAMR”).
Closed Deals:
- The acquisition of Resonant (RESN) by Murata Electronics North America on March 28, 2022. It took 42 days for this deal to be completed.
- The acquisition of Apria (APR) by Owens & Minor on March 29, 2022. It took 78 days for this deal to be completed.
- The acquisition of GreenSky (GSKY) by The Goldman Sachs Group (GS) on March 29, 2022. It took 195 days for this deal to be completed.
- The acquisition of Verso Corporation (VRS) by BillerudKorsnäs AB on March 31, 2022. It took 103 days for this deal to be completed.
- The acquisition of Level One Bancorp (LEVL) by First Merchants Corporation (FRME) on April 1, 2022. It took 148 days for this deal to be completed.
- The acquisition of Veoneer (VNE) by Qualcomm Incorporated (QCOM) on April 1, 2022. It took 179 days for this deal to be completed.
- The acquisition of Guaranty Federal Bancshares (GFED) by QCR Holdings (QCRH) on April 1, 2022. It took 143 days for this deal to be completed.
- The acquisition of People's United Financial (PBCT) by M&T Bank Corporation (MTB) on April 1, 2022. It took 403 days for this deal to be completed.
Top 10 deals with largest spreads:
| Symbol | Announced Date | Acquiring Company | Closing Price | Last Price | Closing Date | Profit | Annualized Profit |
|---|---|---|---|---|---|---|---|
| CHNG | 01/06/2021 | UnitedHealth Group Incorporated (UNH) | $25.75 | $21.8 | 06/30/2022 | 18.12% | 76.02% |
| ATVI | 01/18/2022 | Microsoft Corporation (MSFT) | $95.00 | $80.82 | 06/30/2023 | 17.55% | 14.17% |
| PTRS | 11/04/2021 | OceanFirst Financial Corp. (OCFC) | $10.38 | $9.14 | 06/30/2022 | 13.57% | 56.92% |
| WLL | 03/07/2022 | Oasis Petroleum Inc. (OAS) | $92.80 | $81.83 | 12/31/2022 | 13.41% | 18.06% |
| BRG | 12/20/2021 | Blackstone Real Estate (N/A) | $29.85 | $26.62 | 06/30/2022 | 12.13% | 50.91% |
| MBII | 03/16/2022 | Bioceres Crop Solutions Corp. (BIOX) | $1.21 | $1.1 | 09/30/2022 | 10.00% | 20.39% |
| PBIP | 03/02/2022 | Fulton Financial Corporation (FULT) | $18.01 | $16.41 | 09/30/2022 | 9.75% | 19.88% |
| TEN | 02/23/2022 | Apollo Global Management, Inc. (APO) | $20.00 | $18.28 | 12/31/2022 | 9.41% | 12.67% |
| TSEM | 02/15/2022 | Intel Corporation (INTC) | $53.00 | $48.51 | 02/15/2023 | 9.26% | 10.66% |
| SAVE | 02/07/2022 | Frontier Group Holdings, Inc. (ULCC) | $23.93 | $22.02 | 12/31/2022 | 8.69% | 11.70% |
Conclusion:
Eight deals were completed successfully as we came to the end of the first quarter of 2022. SPAC activity stayed low last week.
On March 31, 2022, The Wall Street Journal reported that four U.S. senators had sent a letter to the Federal Trade Commission citing concern about Microsoft’s (MSFT) proposed acquisition of Activision Blizzard (ATVI).
According to an article on Seeking Alpha, "The U.S. Dept. of Justice is said to have issued warning letters to companies that have transactions that have passed statutory review periods that warned them the deals could still be challenged if the companies close them."
A Combination Of Tools And Analysis For Event-Driven Strategies.
For over a decade we built tools to help event-driven investors that focus on strategies like merger arbitrage. The Inside Arbitrage service provides the best combination of tools and analysis for various event-driven strategies like risk arbitrage, spinoffs and SPACs.
We also track insider purchases and companies that are buying back their own stock while their insiders are making open market purchases. We use these strategies for idea generation and then do detailed work to identify opportunities for our model portfolio and personal portfolios. Click here to learn more.
This article was written by
I am an entrepreneur and investor with a focus on event driven strategies including merger arbitrage, spinoffs, (legal) insider trading, buybacks and SPACs. I was one of the earliest contributors on Seeking Alpha and started publishing here in 2005. For more than a decade I have been writing every week about M&A and interesting insider transactions. My work has been mentioned in Barron's, Dow Jones, BNN Bloomberg and other publications.
I have been an active investor for more than two decades and my background in technology has helped me built tools that inform my investing process, especially as it relates to event-driven strategies that require updated data and processes. The focus on my Inside Arbitrage service is to provide investors with the right combination of tools and analysis to help them take advantage of strategies that can perform well across market cycles.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of FHN, TSEM, HTA, TGNA, BRG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: I have long positions in First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Recommended For You
Comments (9)
