Merger Arbitrage Mondays: Nielsen Holdings To Be Taken Private (NYSE:NLSN)

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 (NYSE: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.

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.

1. 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.
2. 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. (OTCPK:ENRFF)	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:

1. 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.
2. The acquisition of Plantronics (POLY) by HP Inc. (HPQ) for $3.3 billion or $40 per share in cash.
3. The acquisition of Randolph Bancorp (RNDB) by Hometown Financial Group for $146.5 million or $27 per share in cash.
4. The acquisition of LHC Group (LHCG) by Optum, a part of UnitedHealth Group for $6.2 billion or $170 per share in cash.
5. 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.
6. The acquisition of Manning & Napier (MN) by Callodine for $137.1 million or $12.85 per share in cash.

Deal Updates:

1. 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.
2. 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.
3. 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.
4. 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 video game company.
5. 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.
6. 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:

1. The acquisition of Resonant (RESN) by Murata Electronics North America on March 28, 2022. It took 42 days for this deal to be completed.
2. The acquisition of Apria (APR) by Owens & Minor on March 29, 2022. It took 78 days for this deal to be completed.
3. 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.
4. The acquisition of Verso Corporation (VRS) by BillerudKorsnäs AB on March 31, 2022. It took 103 days for this deal to be completed.
5. 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.
6. The acquisition of Veoneer (VNE) by Qualcomm Incorporated (QCOM) on April 1, 2022. It took 179 days for this deal to be completed.
7. 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.
8. 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.”