With its stock price at its lowest levels in more than six years, a CFO change that just transpired, the pending retirement of its CEO, and calls by an activist investor to put itself up for a sale, Nielsen‘s Board of Directors has come under intense pressure over the last several weeks to move the company forward.
At 6am Eastern on Wednesday (9/12), the Board made a move: It has “expanded the scope” of a strategic review of its troubled Buy segment to include “a broad review of strategic alternatives” for the company and its businesses.
The expanded review includes an assessment of a broad range of options—including continuing to operate as a public, independent company; a separation of either Nielsen’s Buy or Watch segment; or a sale of the company.
That said, Nielsen noted that there can be no assurance that the review will result in a specific transaction or other alternative.
This expanded strategic review, undertaken after consultation with management and Nielsen’s financial and legal advisors, is being led by Chairman of the Board James Attwood.
J.P. Morgan Securities LLC and Guggenheim Securities LLC have been engaged as financial advisors, and Wachtell, Lipton, Rosen & Katz is on as Nielsen’s legal counsel in connection with the review.
In a statement, Attwood said, “The Board continues to support the company’s strategic priorities, including Total Audience, the Connected System and our operational transformation, including cost out initiatives and consolidations designed to increase agility. However, the Board believes that a broad review of strategic alternatives is in the best interest of the company and its shareholders.”
As the Board conducts its review, Attwood remains confident that the Board and Nielsen’s “valued associates” remain focused on providing clients “with the most complete understanding of what consumers watch and buy with mission critical data that enables markets around the world to act faster, more efficiently and with greater confidence.”
The Board, Nielsen says, is proceeding expeditiously but has not set a timetable for completion of the review. “The company will provide updates on the review at such time as it determines that further disclosure is appropriate or required,” Nielsen notes.
Nielsen’s stock has been battered since September 2016, when it was trading in the mid-$53 range. Since then, NLSN has largely declined in value, sinking to a fresh all-time low of $21.77 on August 7.
In pre-market trading on Wednesday, Nielsen was up 20 cents from Tuesday’s close, to $26.58. Still, that’s below levels seen until late July, and reflects a new reality for shareholders: Nielsen’s 1-year target estimate is now $27.53, after financial analysts revised downward their expectations for a company that is thriving with its audio and visual audience measurement but struggling with its consumer research business; the latter “Buy” segment is seeing difficulties mirrored at similar companies due to a changing marketer and media buying and planning dynamic at advertising agencies and corporations across the U.S.
The expanded review at Nielsen comes just 48 hours after it welcomed David J. Anderson as its new CFO, replacing Jamere Jackson.
Jackson tendered his resignation on August 15 and is already in Southwest Florida at his new employer: Hertz Global Holdings.
Much of Nielsen’s financial woes came under Jackson’s tenure as Nielsen CFO.
In October 2016, Nielsen unveiled its third-quarter 2016 financial results to much investor disappointment; the audience measurement and consumer data company suffered for disappointing analysts and their investors by missing consensus estimates.
Investors instantly reacted to the miss, with Nielsen stock off nearly 12% in pre-market activity. It proved to be an unfortunate historic day in Nielsen’s history, as the company has struggled on Wall Street for some 23 months since that Q3 2016 release.
By late July 2018, Nielsen’s stock was nearing rock bottom. Then came perhaps its “Tragic Thursday” — CEO Mitch Barns’ retirement at year’s end was announced, along with confirmation that Nielsen is conducting “an in-depth strategic review” of its Buy segment. This news came alongside lackluster Q2 results showing flat revenue growth and a sharp drop in net income.
This led to the July 26 move by New York-based Elliott Management Corp. and its sole managing member, Paul E. Singer, to acquire more shares in the nation’s dominant audience measurement and data analytics company — and call for an outright sale of Nielsen.
Elliott now holds some 30 million Nielsen shares, constituting approximately 8.4% of the outstanding common stock. The value of this stake is approximately $660 million.
Speaking to The Wall Street Report over the weekend, Elliott called on Nielsen to sell not just its “Buy” segment, which has been a drag on company revenue for several quarters, but to put the entire company on the block. The “Buy” segment performance is a primary reason for his calls for a full sale of Nielsen, saying the division has “failed to keep up with competitors.” They include GfK IRI and NPD Group.
Now, it seems the Nielsen Board is listening.
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