A consortium's raised bid was enough to convince Nielsen Holdings PLC's board to go private, though it remains a question as to whether it will also win over one of Nielsen's largest shareholders.

Nielsen on March 29 agreed to a deal led by Elliott Management Corp. affiliate Evergreen Coast Capital Corp. and Brookfield Business Partners LP for $28 per share, valuing the company at about $10 billion, or $16 billion including debt. Nine days earlier, Nielsen had rejected an offer of $25.40 per share. All told, the new deal represents a 10% bump above the March 20 offer and roughly a 60% premium to Nielsen's share unaffected stock price as of March 11.

Wall Street analysts believe that the offer represents improved value for shareholders and will help insulate the beleaguered company, to some extent, against industry criticism as it rolls out its new integrated measurement platform. However, they also warned that at least one major shareholder may put up a fight in hopes of attracting a higher offer.

"We believe the increased offer accurately reflects [Nielsen's] current value and represents a fair compromise between buyers and shareholders," Jefferies analyst Surinder Thind wrote in a research note.

Defusing distractions

Analysts see several benefits to the transaction.

First, going private gives Nielsen more flexibility as it would not have to engage in quarterly earnings calls, said Matthew Thornton, an analyst at Truist. In an interview, Thornton also noted that Nielsen would no longer need to worry about potential stock volatility around the roll out of Nielsen One, an integrated, cross-viewership platform that aims to better measure digital and streaming viewing in concert with traditional linear TV watching. Nielsen One is testing a first iteration with the Walt Disney Co. and MAGNA and is slated to arrive by year-end, before the company fully transitions to it in 2024, following broader client interaction and assessment.

"Nielsen can take another month or three to deliver the right product or increase short-term investments without having to endure investor flak," Thornton said, adding that the moves might also reduce criticism from media sellers and buyers.

Craig Huber Associates analyst Doug Arthur agreed, writing that "privatization would free-up management to focus on Nielsen One and avoid the distraction of defending itself to a skeptical public market."

Market volatility

The longtime industry standard-bearer for linear TV measurement has endured a turbulent year. The Video Advertising Bureau Inc. trade group, which represents major TV networks' and distributors' advertising sales organizations, pointed out in April 2021 that Nielsen's sample panels had eroded significantly during the pandemic, resulting in viewership declines and hundreds of millions in lost ad transactions.

Subsequently, the Media Rating Council suspended accreditation of Nielsen's national, local people meter and set meter market services in September 2021. Nielsen has said it is committed to the audit process and resolving the suspension.

Last week, MRC said its audit of Nielsen's national and local ratings services would likely extend through the third quarter.

Amid the controversies, Nielsen's stock price has suffered, trading below $17 per share as recently as early March ahead of news reports of the consortium's offer.

Whither WindAcre?

Even amid the turbulence, one major stockholder has continued to argue that Nielsen's shares have been grossly undervalued for some time. Nielsen's intrinsic value per share is "well in excess of $40 per share," said WindAcre Partnership LLC, a Houston investment firm that holds a 9.6% stake in Nielsen, making it the company's third-largest shareholder.

After the consortium's initial offer of $25.40 per share, WindAcre said it had planned to block the transaction through the combination of its held Nielsen shares and its economic exposure equivalent to another 14.4% of Nielsen shares through cash-settled swaps.

Following the revised offer, WindAcre said in a March 30 SEC filing that it is "evaluating potential courses of actions with respect to the transaction."

Baird analyst Jeffrey Meuler said that with essentially a 24% stake, WindAcre "could still agitate for a higher price."

But Thornton noted that WindAcre may have a harder time blocking the deal, given its new structure. The original offer would have required the approval of the holders of at least 75% of the shares voting on the transaction under U.K. law.

But with Elliott slightly raising the price and changing the deal structure to allow a potential tender offer, WindAcre would need to reach a 50% position, an unlikely accumulation, Thornton said. Without attaining that level, "It doesn't matter what WindAcre wants or doesn't want, Elliott will close the transaction."

WindAcre did not respond to queries seeking an update.

Potential players

The transaction agreement also holds a 45-day "go-shop" period during which Nielsen can solicit and assess any alternative acquisition proposals. Nielsen would have to pay a fee if it terminates the consortium's agreement and accepts another offer.

Analysts do not expect that to happen. Nielsen underwent a strategic review in August 2018 during which private equity firms had "a look at the company in the not-too-distant past," Meuler said. One would have stepped up already if it had interest, and Meuler does not see any strategic acquirers on the horizon.

Thornton noted that WindAcre is not large enough to take Nielsen private on its own. More, if it wanted to go that route, it could have joined with Elliott. Given the aforementioned strategic review, Thornton sees "a low likelihood someone else comes in over the top."

Jefferies' Thind also does not see a strategic buyer emerging. In a note, Thind wrote that Nielsen's value as industry currency is "predicated to a large extent on its independence." A potential buyer from the content production or distribution realms could undermine that position.