Not Elliott alone, however. To acquire Citrix, it teamed up with Vista Equity Partners. And to buy Nielsen, it teamed up with Brookfield Asset Management, one of the biggest investors in the world. That collaboration is a hallmark of Elliott’s typical approach to buyouts, which also includes a unique fusion of public and private markets.
Let’s take a closer look at how the Nielsen deal came together, and how it fits into Elliott’s emergence as a magnet for mega-deals.
As it did with Citrix and other past buyout targets like Athenahealth, Elliott first invested in Nielsen when it was a public company, taking a stake in 2018. Initially, Elliott pushed Nielsen to pursue a sale, but no deal materialized. Instead, the two sides played a longer game. Nielsen brought on David Kenny as its new CEO a few months after Elliott’s investment, and firm and company began to collaborate on Nielsen’s long-term plans.
Nielsen’s stock was floundering when Elliott first took a stake. The primary reason was the ongoing transformation of how we all watch shows and movies. Nielsen had risen to dominance in the 20th-century era of television, establishing itself as the premier provider of TV ratings relied upon by networks and advertisers to negotiate rates and place ads. But in the streaming era, the very concept of ratings had changed, and investors were concerned about Nielsen’s ability to keep up. If TV is dying, then the company synonymous with TV ratings might be in trouble, too.
Nielsen didn’t pursue a full sale, but it did sell part of itself: In 2020, with prodding from Elliott, it announced plans to divest the NielsenIQ retail division to Advent International for $2.7 billion, putting the profits back into its flagship media-measurement business. Nielsen also gave the best glimpse yet at its future strategy when it launched Nielsen One, a new measurement system designed to measure reach across TV, streaming, digital channels and a range of other platforms.
Through it all, public investors were underwhelmed: During Elliott’s first two years as an investor, Nielsen shares were down another 40%.
But Elliott still saw a profitable business with enviable brand recognition and ample cash flow with a concrete plan for how to adapt to a new era. Eventually, after years of looking under the hood—extended diligence that it could not have done had it not acquired a public stake—it decided that taking Nielsen private was the best bet.
Buyout talks have been underway for over a year, according to a source familiar with the deal, and they burst into the open last week, when Nielsen rejected an offer from Elliott and Brookfield worth $25.40 per share. The two firms bumped their bid up by about 10%, to $28 per share, and spent the next several days pitching Nielsen on how it might benefit by undertaking its transition as a private company, avoiding the short-term focus of public shareholders and making it easier to invest significant capital in its digital shift.
The pitch worked. Nielsen was convinced, and the $16 billion deal was unveiled this Tuesday.
Raising enough debt to fuel a mega-deal has grown much more difficult since the onset of the war in Ukraine. But Elliott and Brookfield were able to finance the takeover because talks had been underway so long; otherwise, it might not have been possible, according to a source familiar with the deal.
If debt markets remain persistently chilly, we probably won’t see many other buyouts of this size during the rest of 2022. But given the rate at which Elliott has been pumping out mega-deals so far this year, don’t be too sure. —K.D.
|
|
|
|
