Merger Arbitrage Mondays - Nielsen Holdings To Be Taken Private By A Consortium Of Private Equity Firms

Merger activity increased significantly last week with six new deals announced and eight deals completed. There were 17 deals announced in the month of March, with a total value of $64.55 billion.

Nielsen Holdings NLSN

Nielsen Holdings was founded in Netherlands in 1923 by Arthur C. Nielsen Sr., who has been credited for coining the business term "market share". Originally called the AC Nielsen Company, it was the first company to offer market research. The company was initially incorporated with the idea of selling engineering performance surveys, and in 1932, it expanded its business by creating a retail index that tracked the flow of food and drug purchases. Nielsen's retail index, the first of its kind, allowed companies to determine their 'share' of the market.

Back in the hustle-bustle days of the dot com bubble, I worked at a company in San Francisco that managed to carve a nice little niche for itself in the then emerging category of natural and organic food that Nielsen had decided not to track. Those were the days when Whole Foods, Wild Oats and Odwalla were independent companies.

Today, Nielsen Holdings operates as a measurement and data analytics company in over 100 countries, providing clients with data about what consumers watch (through programming, advertising) and what they buy (based on categories, brands, products) on a local and global basis and how those choices intersect.

Until five years ago, Nielsen controlled the majority share of its market and was considered to be the only game in town. Consumer behavior has been rapidly changing with technology that allows people to skip commercials while streaming shows on different media platforms. Nielsen now faces competition from other players like Comscore, iSpot and VideoAmp.

Nielsen's stock dropped from over $44 five years ago to as low as $13.85 in 2020 and more recently trading in the $17-$18 per share range. At the company’s Q4 investor presentation, Nielsen announced a $1 billion share repurchase plan and rolled out its “advancing our Nielsen One product roadmap,”  an integrated, cross-viewership platform.

We added Nielsen Holdings as potential deal in the works on March 14, 2022, when The Wall Street Journal reported that, a consortium of private-equity firms including Elliott Management was in advanced talks to buy the company for about $15 billion including debt. Nielsen's price after this announcement was $22.85. Elliott Management called for a sale of the company as far back as 2018.

On March 20, 2022, The Board of Directors of Nielsen Holdings determined not to proceed with an unsolicited acquisition proposal from a private equity consortium that valued the company at $25.40 per share. On March 22, 2022, Bloomberg reported that Elliott Investment Management and Brookfield Asset Management were weighing a sweetened bid for Nielsen after its Board rejected their previous offer.

On March 29, 2022, Nielsen Holdings entered into a definitive agreement to be acquired by a private equity consortium led by Evergreen Coast Capital Corporation, an affiliate of Elliott Investment Management, and Brookfield Business Partner together with other institutional partners for $28 per share in an all-cash transaction valued at approximately $16 billion, including the assumption of debt. The deal represents a 10% premium over the Consortium’s previous proposal and a 60% premium over Nielsen’s unaffected stock price as of March 11, 2022.

According to the agreement, Nielsen has a 45-day "go-shop" period, during which it can actively solicit, evaluate and potentially enter into negotiations with parties that offer alternative acquisition proposals. Nielsen will have to pay the consortium a termination fee of $102 million if it accepts a superior proposal from a competing bidder.

Expected to close in the second half of the year, the transaction will also be subject to UK court approval pursuant to a scheme of arrangement.

You can find all the active deals listed below in our Merger Arbitrage Tool (MAT) that automatically updates itself during market hours.

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Deals In The Works

There were no new deals announced in the Deals in the Works section last week.

SPAC Arbitrage

There were two new SPAC IPOs filed and two new SPAC combinations announced last week. One SPAC business combination was terminated last week. You can find the new SPAC IPO announcements in our SPACs tool here.

• Artemis Strategic Investment Corporation (ARTE) and Logflex MT Holding Limited (doing business as “Novibet”), a technology-enabled operator, jointly announced that the companies entered into a definitive agreement for a business combination, whereby Artemis will merge into a new wholly-owned subsidiary of Novibet.
• Prime Blockchain, a diversified infrastructure provider for blockchain technology that owns and operates a portfolio of proprietary data centers and crypto assets mining operations in North America, and 10X Capital Venture Acquisition Corp. II (VCXA) announced the execution of a definitive Business Combination Agreement.

Weekly Spread Changes:

The table below shows weekly spread changes between March 25 and April 1, 2022.

Symbol Quote Acquiring Company Acquiring Company Quote Current Spread Last Week Spread Spread Change Weekly Deal Type PTRS 9.14 OceanFirst Financial Corp. (OCFC) 19.89 13.57% 9.73% 3.84% Special Conditions WLL 81.83 Oasis Petroleum Inc. (OAS) 149.9 13.41% 9.78% 3.63% Cash Plus Stock PBIP 16.41 Fulton Financial Corporation (FULT) 16.66 9.75% 6.82% 2.93% All Cash EXTN 6.28 Enerflex Ltd. (EFX.TO) 8.08 4.94% 3.03% 1.91% All Stock MGP 39.34 VICI Properties Inc. (VICI) 28.92 0.42% -0.85% 1.27% All Stock MBII 1.1 Bioceres Crop Solutions Corp. (BIOX) 13.75 10.00% 12.93% -2.93% All Stock ATC 22.63 MKS Instruments, Inc. (MKSI) 141.21 6.03% 10.62% -4.59% Cash Plus Stock AZPN 166.96 Emerson Electric Co. (EMR) 98.42 -4.17% 1.36% -5.53% Special Conditions SAFM 190.42 Cargill and Continental Grain Company (N/A)   6.61% 12.44% -5.83% All Cash JOBS 60.27 Garnet Faith Limited (N/A)   1.21% 12.86% -11.65% All Cash

Deal Statistics:

Total Number of Deals Closed in 2022 53 Total Number of Deals Not Completed in 2022 3 Total Number of Pending Deals Cash Deals 45 Stock Deals 12 Stock & Cash Deals 9 Special Conditions 8 Total Number of Pending Deals 74 Aggregate Deal Consideration $699.18 billion

New Deals:

• The merger of Neenah (NP) and Schweitzer-Mauduit International (SWM) for $1.18 billion in an all stock deal. Under the terms of the agreement, shareholders of Neenah will receive 1.358 shares of SWM common stock for each share of Neenah common stock owned.
• The acquisition of Plantronics (POLY) by HP Inc. (HPQ) for $3.3 billion or $40 per share in cash.
• The acquisition of Randolph Bancorp (RNDB) by Hometown Financial Group for $146.5 million or $27 per share in cash.
• The acquisition of LHC Group (LHCG) by Optum, a part of UnitedHealth Group for $6.2 billion or $170 per share in cash.
• The acquisition of Nielsen Holdings (NLSN) by Evergreen Coast Capital Corporation for $16 billion or $28 per share in cash. We added NLSN as a potential deal to the Deals in the Works section on March 14, 2022,  and the price after the news of the potential deal came out was $22.85.
• The acquisition of Manning & Napier (MN) by Callodine for $137.1 million or $12.85 per share in cash.

Deal Updates:

• March 24, 2022: All regulatory conditions set forth in the Merger Agreement between GreenSky (GSKY) and The Goldman Sachs Group (GS) have been satisfied. The merger is expected to close on March 29, 2022.
• On March 29, 2022, Verso Corporation (VRS) received necessary approvals from the Nuclear Regulatory Commission and the Public Service Commission of Wisconsin to complete its previously announced merger with BillerudKorsnäs AB. The transaction is expected to close on March 31, 2022.
• On March 30, 2022, Republic Services (RSG) and US Ecology (ECOL) announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended has expired.
• March 31, 2022: According to The Wall Street Journal, four U.S. senators sent a letter to the Federal Trade Commission citing concern about Microsoft’s (MSFT) proposed acquisition of Activision Blizzard (ATVI), saying the deal could undermine employees’ calls for accountability over alleged misconduct at the videogame company.
• On March 31, 2022, Mimecast (MIME) received written notice from the Committee on Foreign Investment in the United States (“CFIUS”) that there are no unresolved national security concerns.
• On April 1, 2022, Atotech Limited (ATC) announced that it has agreed to extend the date for completing MKS Instruments (MKSI) pending acquisition of Atotech to September 30, 2022 from March 31, 2022. The extension is intended to allow additional time for the regulatory approval from China’s State Administration for Market Regulation (“SAMR”).

Closed Deals:

• The acquisition of Resonant (RESN) by Murata Electronics North America on March 28, 2022. It took 42 days for this deal to be completed.
• The acquisition of Apria (APR) by Owens & Minor on March 29, 2022. It took 78 days for this deal to be completed.
• The acquisition of GreenSky (GSKY) by The Goldman Sachs Group (GS) on March 29, 2022. It took 195 days for this deal to be completed.
• The acquisition of Verso Corporation (VRS) by BillerudKorsnäs AB on March 31, 2022. It took 103 days for this deal to be completed.
• The acquisition of Level One Bancorp (LEVL) by First Merchants Corporation (FRME) on April 1, 2022. It took 148 days for this deal to be completed.
• The acquisition of Veoneer (VNE) by Qualcomm Incorporated (QCOM) on April 1, 2022. It took 179 days for this deal to be completed.
• The acquisition of Guaranty Federal Bancshares (GFED) by QCR Holdings (QCRH) on April 1, 2022. It took 143 days for this deal to be completed.
• The acquisition of People's United Financial (PBCT) by M&T Bank Corporation (MTB) on April 1, 2022. It took 403 days for this deal to be completed.

Top 10 deals with largest spreads:

Symbol Announced Date Acquiring Company Closing Price Last Price Closing Date Profit Annualized Profit CHNG 01/06/2021 UnitedHealth Group Incorporated (UNH) $25.75 $21.8 06/30/2022 18.12% 76.02% ATVI 01/18/2022 Microsoft Corporation (MSFT) $95.00 $80.82 06/30/2023 17.55% 14.17% PTRS 11/04/2021 OceanFirst Financial Corp. (OCFC) $10.38 $9.14 06/30/2022 13.57% 56.92% WLL 03/07/2022 Oasis Petroleum Inc. (OAS) $92.80 $81.83 12/31/2022 13.41% 18.06% BRG 12/20/2021 Blackstone Real Estate (N/A) $29.85 $26.62 06/30/2022 12.13% 50.91% MBII 03/16/2022 Bioceres Crop Solutions Corp. (BIOX) $1.21 $1.1 09/30/2022 10.00% 20.39% PBIP 03/02/2022 Fulton Financial Corporation (FULT) $18.01 $16.41 09/30/2022 9.75% 19.88% TEN 02/23/2022 Apollo Global Management, Inc. (APO) $20.00 $18.28 12/31/2022 9.41% 12.67% TSEM 02/15/2022 Intel Corporation (INTC) $53.00 $48.51 02/15/2023 9.26% 10.66% SAVE 02/07/2022 Frontier Group Holdings, Inc. (ULCC) $23.93 $22.02 12/31/2022 8.69% 11.70%

Conclusion:

Eight deals were completed successfully as we came to the end of the first quarter of 2022. SPAC activity stayed low last week.

On March 31, 2022, The Wall Street Journal reported that four U.S. senators had sent a letter to the Federal Trade Commission citing concern about Microsoft’s (MSFT) proposed acquisition of Activision Blizzard (ATVI).

According to an article on Seeking Alpha, "The U.S. Dept. of Justice is said to have issued warning letters to companies that have transactions that have passed statutory review periods that warned them the deals could still be challenged if the companies close them."

Disclaimer: I have long positions in First Horizon (FHN), Tower Semiconductor (TSEM), Healthcare Trust of America (HTA), TEGNA (TGNA) and Bluerock Residential Growth REIT (BRG). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.