Shares of Nielsen Holdings (NYSE:NLSN) have appreciated more than 30% since Monday upon talks of a potential sale. According to the Wall Street Journal, a group of private-equity firms is in late-stage talks to buy the company for roughly $15 billion, which includes debt. The group includes Elliott Management, a well-known activist fund. In the past, Elliott has invested in companies like Twitter (NYSE:TWTR) and AT&T (NYSE:T).
Why Is NLSN Stock in the Spotlight Today?
A source close to the matter stated that financing talks with banks are already in progress. Furthermore, a takeover deal could possibly be completed in the upcoming weeks, although there is no guarantee the deal will materialize. Other details, like a potential share purchase price, were not immediately disclosed. As of today, Nielsen has a market capitalization of $8.3 billion and total debt of over $5 billion.
When asked about the potential buyout, a Nielsen representative commented, “As a matter of company policy, Nielsen does not comment on market rumors or speculation.”
Elliott Management has a long history with Nielsen and is responsible for overseeing several strategic changes. For starters, Elliott has owned a stake in NLSN stock since 2018. During that time, Elliott had a 8.4% stake and urged Nielsen to sell itself. The next year, Nielsen spun out Global Connect, which analyzes data from consumers. Global Connect was sold to private-equity firm Advent International in 2021 for $2.7 billion. By 2020, Elliott’s ownership in Nielsen had increased to roughly 13%. The firm had also acquired a spot on Nielsen’s board of directors.
When asked, Elliott declined to comment on the potential buyout.
A Buyout May Benefit Nielsen
Nielsen has had a challenging few years. For example, yearly revenue has consistently shrank from 2017 to 2021. In 2017, revenue came in at $6.5 billion. In 2021, revenue came in at $3.5 billion, reflecting a four-year decline of 46%.
Furthermore, Nielsen is known as the “ultimate authority in television ratings.” However, the company has made a number of errors in recent years. Last December, Nielsen disclosed that it had been under-counting its out-of-home audience for the past 16 months. Nielsen stated that the undercounts had “no impact or minimal impact.” However, the Video Advertising Bureau stated that it cost TV networks as much as $700 million in lost advertising time.
In addition, the Media Rating Council concluded that Nielsen had been undercounting adults aged 18-49 in February of 2021 and subsequently suspended Nielsen’s accreditation.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.