Shares of Nielsen (NYSE:NLSN) are soaring higher by over 20% this morning after the company agreed to be bought out by a group of private equity investors. Led by Elliot Management’s private equity arm and Brookfield Asset Management’s (NYSE:BAM) Brookfield Business Partners, the group will pay $28 per share of NLSN stock. That represents a 26% premium from Monday’s $22.21 close.
Nielsen operates as a TV audience analysis company. The company measures TV ratings, which networks then use to gauge the effectiveness of advertisements and more. In recent years, Nielsen has been hurt by the rise of streaming and the decline of standard TV.
Here’s what investors should know moving forward.
Why Is NLSN Stock Up Today?
For the buyout, the $28 per share purchase price implies a market capitalization of around $10 billion. However, the group of private investors will acquire Nielsen for $16 billion to account for the company’s debt. What’s more, the deal includes a 45-day “go-shop” period, meaning Nielsen can explore other bids. The deal is expected to close in the second half of 2022.
Previously, Nielsen had “been in advanced talks” with a private equity group led by Elliot for a buyout at $25.40 per share. However, Nielsen recently ended the talks due to price concerns.
In addition, investment firm WindAcre Partnership owns a 10% stake in Nielsen, along with a 14% stake through swaps. WindAcre was concerned with the previous proposition at $25.40 per share. The firm said they would “buy a large enough stake to block the transaction if completed.” WindAcre has not yet said whether it supports the new buyout.
Currently, Elliot has roughly $52 billion in assets under management (AUM) and follows a “value-added global investment approach.” In 2018, Elliot purchased an 8.4% stake in NLSN stock. In the same year, the firm also pressured Nielsen to sell itself due to a change in consumer viewing habits. Although Nielsen did not end up selling, it did spin off Global Connect a year later as a public company. Last year, Global Connect was sold to a private equity firm for around $3 billion.
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.