The group, which is led by New York activist investment firm Elliott Investment Management LP, convinced the Nielsen board to agree to a US$28-a-share offer for its New York Stock Exchange listed shares after rejecting an earlier bid.
Nielsen, which traded for US$17.51 a share as recently as March 11, said on March 20 it had turned down an offer of US$25.40 for its stock.
The consortium will assume just more than US$5.8-billion in Nielsen debt, prompting Nielsen to label the transaction a US$16-billion deal.
Brookfield’s part of the deal will be conducted through its Brookfield Business Partners LP entity, which trades separately from the parent on the Toronto and New York stock exchanges. Brookfield says it will put US$600-million of its own money in the deal and will bring other unnamed institutional partners in to buy a total of US$2.5-billion in preferred equity in the new Nielsen structure.
That preferred equity will be convertible into 45 per cent of Nielsen’s common stock after the transaction closes. Brookfield “will be actively involved in the company’s governance,” it said in a statement.
While many people know Nielsen for its television ratings, the company has branched out into other data on audiences and other types of analytics across multiple platforms in 55 countries. It had US$3.5-billion in revenue and US$963-million in profit last year.
Dave Gregory, a managing partner at Brookfield Business Partners, said in a statement that Nielsen is “a market-leading company that is deeply embedded in the media ecosystem as a trusted service provider to its customers. Nielsen is well positioned to lead the industry into the next generation of audience measurement across all channels and platforms.”
Nielsen, however, has been tussling with its traditional customer base, as the Media Rating Council, a group of U.S. broadcast stations, advertisers and advertising agencies, has questioned whether Nielsen can accurately measure audience in a world of streaming and new devices. In September, after questioning Nielsen’s measurement methodology during the COVID-19 pandemic, the MRC suspended its accreditation of Nielsen’s National Television service.
The company said it is on track to introduce Nielsen ONE – “a transformative cross-media solution” with evolved metrics – in 2022. Nielsen says it has “growing relevance as audiences shift to streaming.”
The transaction agreement provides for a 45-day “go-shop” period, during which Nielsen will actively solicit additional bids from other parties. Any competing winning bidder would pay the US$102-million termination fee Nielsen owes to the Elliott-Brookfield consortium if the ratings company backs out of that deal to accept a superior offer.
Nielsen shares closed at US$26.72 Tuesday – below the Elliott-Brookfield offer, which suggests investors aren’t necessarily expecting a higher bid.
When Nielsen rejected the US$25.40 offer earlier this month, it said the WindAcre Partnership LLC, which owns 9.6 per cent of the company’s shares, plus an additional 14.4 per cent through ownership of financial derivatives, opposed the deal and would acquire additional shares to prevent shareholder approval of it. Windacre, Nielsen said, declined to join the Elliott-Brookfield consortium.
Under British law, a takeover requires approval of at least 75 per cent in value of the shares voting on the transaction. While Nielsen is headquartered in New York, it is registered as a British corporation.
Activist investor Elliott had pushed Nielsen, a public company since 2011, for a sale in 2018, forcing the market research company to consider splitting into two publicly traded firms a year later. But the plan was scrapped in 2020 when Nielsen decided to sell its consumer goods data unit for US$2.7-billion to sharpen its focus on its media business.
Arthur C. Nielsen, a Chicago engineer, started the company in 1923 when he borrowed US$45,000 to launch a business to test the quality of conveyor belts and turbine generators. From the start, however, the company conducted market research, and it soon moved into measuring grocery and drugstore sales. In 1936, it acquired rights to the Audimeter, a device that attached to a radio to record when it was on and what station it was tuned to.
Nielsen entered Canada in 1944 and began measuring TV audiences in 1950.
Big Data and analytics is a popular investing theme for major institutional investors, including Canadian public pension fund managers.
Canada Pension Plan Investment Board owns about 25 per cent of Sportradar Group AG, a Swiss sports-data company that went public in September, 2021, on the Nasdaq stock exchange and is worth about $4.6-billion. CPPIB has invested a total of US$115-million in Databricks, a data, analytics and artificial intelligence company based in San Francisco.
OMERS Growth Equity, a division of Ontario Municipal Employees Retirement System, is an investor in two health-data companies: Innovaccer Inc., a patient-records data company, and Evidation Health Inc., which operates a platform for virtual health programs. OMERS also owns Teranet Inc., a Canadian land-registries system that is trying to expand its data offerings.
The Nielsen deal marks the third transaction for Brookfield Business Partners this year.
On March 18, Brookfield Business Partners said it and other investors would buy La Trobe Financial, an Australian non-bank lender and asset manager, for about US$1.1-billion. Brookfield Business Partners plans to provide about US$250-million of the US$765-million equity in the deal.
On Feb. 28, First Abu Dhabi Bank said it would sell a 60-per-cent stake in its payments business, Magnati, to Brookfield Business Partners. First Abu Dhabi Bank said the deal valued the whole business at US$1.15-billion.
Phil Hardie, an analyst at Scotia Capital, wrote Tuesday that Brookfield Business Partners is “likely setting up for the next leg of growth.”
“We think BBU has ample financial flexibility to absorb the deal and continue to deploy capital opportunistically,” he wrote. Mr. Hardie says Brookfield Business Partners will receive distributions from its investments, has some asset sales in the works and has a commitment from parent Brookfield Asset Management to purchase up to US$1-billion of preferred stock as an additional untapped source of capital.
With files from Reuters
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