Apollo Global Management and Cerberus Capital Management were among the financial sponsors that pursued Nielsen Holdings’ [NYSE:NLSN] Global Connect business, said three sources familiar with the situation.
Talks halted a few weeks ago amid a bid-ask spread between the financial sponsors and New York-based Nielsen, the sources said. None of the suitors were willing to meet Nielsen’s valuation expectations, they added.
On Thursday, Nielsen announced it had concluded a strategic review and decided the best option was to spin off Global Connect as an independent, publicly traded company focused on developing analytics and measurement tools for consumer goods manufacturers and retailers. Nielsen’s core business, Nielsen Global Media, provides independent audience measurements to advertisers.
CEO David Kenny told investors that Nielsen concluded Global Connect and Global Media are “fundamentally different businesses with different financial profiles, different people, different tech needs and different end markets.” CFO Dave Anderson said Nielsen will take a USD 1bn noncash goodwill impairment charge on Global Connect, reducing the carrying value to USD 2.6bn.
Nielsen is projecting that Connect will see a slight revenue decline to USD 3bn for 2019 and steady EBITDA of USD 420m for a 14% margin. The Media unit, meanwhile, will see revenue growth to USD 3.4bn this year and has a 43% EBITDA margin.
Activist investor Elliott Management, which holds an around 5% economic interest in Nielsen, said in a statement on Thursday that it supported the separation of the company into two businesses. As reported, Elliott originally pushed for a sale of Nielsen when it started its campaign in August 2018.
Earlier this year, Nielsen explored a complete sale of the company, as reported, but the suitor pool shrank over the course of the process. In May, this news service reported that Goldman Sachs’s [NYSE:GS] private equity arm was looking to line up partners to finance a bid for Nielsen, given a deal would likely require around a USD 7bn equity check. The report said the sale process was struggling and that a break up was an alternative option.
Shares of Nielsen were trading down 4% this afternoon following the separation announcement as part of the company’s 3Q19 earnings release.
Nielsen declined comment. Apollo and Cerberus did not return request for comment.
by Bhavna Kaul in New York and Amy-Jo Crowley in London