The Break-Up: Strategic Review Ends With Nielsen Split

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After weeks of conducting a strategic review and the failure to attract a buyer, the parent company of the nation’s dominant audience measurement and consumer data provider — Nielsen Holdings plc — will spin off its “Global Connect” business.


This will create two independent, publicly traded companies, with its Global Media business and the Global Connect business.

In a Thursday morning announcement released separately from its Q3 earnings report, New York-based Nielsen said the split of the two divisions would allow each to “have sharper strategic focus and greater opportunity to leverage its unique competitive advantages.”

The strategic review was led by James Attwood, Chairman of Nielsen’s Board of Directors.

“Since beginning the strategic review, Nielsen has evolved significantly,” said David Kenny, Chief Executive Officer for the last year, replacing Mitch Barns. “We are building a track record of execution, led by improved operational and financial discipline, and we have confidence in the path forward for each business. Both the Global Media and Global Connect businesses are independently essential to the industries they serve, but each business has unique dynamics.”

Kenny added that the decision to separate the two Nielsen divisions “marks a milestone in our strategic evolution and will best position each to serve the specific needs of their clients and successfully address rapidly changing dynamics in the marketplace. As two independent companies, we can better drive decision making with velocity and push key initiatives to accelerate performance enhancements of each business.”

With the completion of the strategic review, Attwood resumes his role as Chairman of the Board. He had been serving as Executive Chairman to oversee the company’s strategic review and CEO search.

After the separation is complete, Kenny will serve as CEO of Nielsen’s Global Media business.

Nielsen has begun a search for a CEO of the Global Connect business, which will consider both external and internal candidates. Additions to the management teams and the composition of the boards of directors for both companies will be named in due course, the company said Thursday.

It’s been a bruising 2019 for Nielsen, which is trading at $21 in pre-market trading on Thursday (11/7). The company is shrinking its dividend by a whopping 83%, and its stock in recent months has tumbled to a 10-year low.

But, it’s really been a three-year slide for NLSN, which was trading in the low-$50 range in September 2016.

As part of the separation, beginning with Nielsen’s next dividend payment in December 2019, Nielsen will reduce its quarterly cash dividend payment to $0.06, from $0.35, per ordinary share. The dividend is payable on December 5, to shareholders of record at the close of business on November 21.

The decision to break up Nielsen follows a July 2019 report that no one wanted to buy Nielsen in full. At the time, the company said it was open to breaking itself into pieces in an attempt to make its assets more lucrative for potential bidders.

The bidders never came.

Goldman Sachs had been considering a leveraged buyout of Nielsen in its entirety but declined to move forward earlier this summer.

WHERE RADIO, TV FIT

For broadcast and cable TV stations and its audio brethren, Kenny-led Nielsen Global Media will be the company they will choose to do business with.

For Nielsen, the goal is to serve as “the arbiter of truth for media markets,” offering cross-platform measurement.

Nielsen Global Connect is the former “Buy” segment, and will seek to compete with such global market research firms as London-based Mintel and GfK in that arena. It provides consumer packaged goods manufacturers and retailers with information and marketplace data.

WHAT’S NEXT FOR SHAREHOLDERS

The transaction will be in the form of a distribution to Nielsen shareholders of 100% of the shares of a new entity holding the Nielsen Global Connect business, which will generally be intended to qualify as tax-free to Nielsen and its shareholders for U.S. federal income tax purposes.

Immediately following the transaction, Nielsen shareholders will own shares of both Nielsen and the new entity holding the Nielsen Global Connect business.

Importantly, in conjunction with the spin, Nielsen Global Connect is expected to raise new debt.

It is currently anticipated that substantially all of the proceeds of the new debt will be used for debt reduction at Nielsen.

Nielsen currently expects the spin-off transaction to be completed in nine to twelve months, subject to certain conditions, including, among others, the receipt of final Board approval, receipt of an opinion from counsel and/or ruling regarding the U.S. federal income tax treatment of the distribution, the effectiveness of a Form 10 registration statement to be filed with the SEC, the approval of Nielsen shareholders and works council consultations.

J.P. Morgan Securities LLC and Guggenheim Securities LLC are acting as financial advisors to Nielsen, and Wachtell, Lipton, Rosen & Katz, Baker McKenzie and Clifford Chance LLP are serving as legal advisors to Nielsen.

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