Nov 7, 2019

Nielsen to separate business into two public companies

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Data: Yahoo; Chart: Axios Visuals

Nielsen Holdings, a $7.5 billion company known best for its decades-long position as the leader in television measurement, announced Thursday that it would spin off its retail measurement business, called Nielsen Global Connect, into an independent, public company. Nielsen's Media Connect business, which measures media and advertising consumption, would remain as its own independent, publicly-traded business.

Why it matters: Despite criticism about whether its TV measurement tactics are outdated, Nielsen's media arm has been outperforming its retail counterpart lately, which measures consumer sentiment about goods and retail sales. That division has been negatively impacted by the decline in traditional retail and increased competition. Meanwhile, competitors to Nielsen's media business, like Comscore, have struggled.

Details: According to a statement, the split will give each business separate capital structures, which will allow them to innovate faster. It will also make it easier for investors to put their money behind pure-play businesses.

  • Nielsen's stock is down 25% year-to-date, mostly due to debt increases spurred by its struggling retail arm. Today, Nielsen has about $8.5 billion in debt.
  • Nielsen says that it's already begun creating "fit-for-purpose capital structure targets" for both businesses as it prepares for the transmission.

People: David Kenny, who's currently CEO of the combined company, will serve as the CEO of Nielsen's Global Media business, the company said. Nielsen says it's looking for a CEO for the Global Connect business.

Timing: The announcement comes on the heels of a yearlong strategic review. And while the announcement was kept tight, there was some writing on the wall. Megan Clarken, President and Chief Commercial Officer for Nielsen Global Media, said about two weeks ago she would leave the company.

The big picture: Nielsen came under pressure from activist investor Elliott Management Corporation to sell the businesses about a year ago. Elliott, which holds about 8% of the company's stock, had concerns about the competitiveness of Nielsen's retail business.

  • The pressure forced Nielsen to explore sales to private equity investors, but its debt load remained a problem.
  • Sources told The New York Post in March that Nielsen's debt load was the reason Blackstone, who was considered the top bidder at the time, backed out of its bid to buy the measurement giant.
  • Elliot said Thursday that it supports the decision.

Finances: J.P. Morgan Securities LLC and Guggenheim Securities LLC are acting as financial advisors to Nielsen, per the statement. Wachtell, Lipton, Rosen & Katz, Baker McKenzie and Clifford Chance LLP are serving as legal advisors.

What's next: Nielsen hopes to complete the process over the course of 9 to 12 months.

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