Nielsen (NLSN) Opts for Spin Instead of Sale with Support of Elliott

Nielsen's (NASDAQ: NLSN) year-long review of strategic alternatives has finally come to a close. Instead of selling itself, in whole or in part, the media company believes the best path forward is to spin-off its Global Connect business. This will create two independent, publicly-traded companies - the Global Media business and the Global Connect business. Further, the company reduced its dividend 83 percent in an effort to strengthen the balance sheets of the two companies ahead of the separation. Large holder Elliott Management supports the plan.

The company had offers for both pieces of the businesses before deciding on the split, sources said. However, given accelerating growth, a split was seen as a better way to maximize shareholder value over a sale of one or both of the businesses, it was added.

David Kenny will serve as the CEO of Nielsen's Global Media business and the search is on to find a CEO for the Global Connect business. The company will consider both external and internal candidates for the role.

"We believe that both Media and Connect will be better served by operating independently," Kenny exclusively told StreetInsider.com "They are fundamentally different businesses, with different financial profiles, different people and tech needs, and different end markets. Each business is undergoing a transformation, but they take different forms and require unique investment and focus."

"We expect to complete the transaction within 9 - 12 months,” Kenny added. “During this time, we'll focus on positioning each business to be successful as separate companies, while also working to minimize distraction for clients and associates. I’m very excited about the opportunities ahead for each business."

Elliott Management, which supports the split, said since the review started, Nielsen has significantly improved operational performance across both businesses. The activist hedge fund said both businesses are faster-growing, more profitable, more focused, better positioned, and meaningfully more valuable than they were at the start of the review.

“Separating into two companies represents the best path forward for Nielsen’s business and its shareholders, and we believe it will lead to substantial value creation,” Elliott Partner Jesse Cohn said. “By separating into two independent companies, Nielsen is better able to position both its media and retail measurement franchises for long-term success with differential investment, profitability, capital return and strategic frameworks.”

“The separation will also unlock the substantial valuation upside of both businesses, which today trade at a meaningfully depressed level after a year of uncertainty,” Cohn added. “In particular, this will highlight the Media business as a faster-growing, more profitable and market-leading franchise, allowing it to garner an appropriate valuation multiple reflective of its significant value.”

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

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