Why Did Nielsen Holdings Rise Over 20%?

Shares of Nielsen Holdings PLC (NYSE: NLSN) soared 20.3% on Wednesday after the company announced that it signed an agreement to be acquired by a consortium for nearly $16 billion in cash, including debt.

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The consortium, which offered $28 for each share of Nielsen, is led by equity firms Brookfield Business Partners and Evergreen Coast Capital, an affiliate of Elliott Investment Management. The new offer price is 10% higher than the consortium’s earlier offer.

James A. Attwood, the Chairperson of Nielsen’s board, said, “After a thorough assessment, the board determined that this transaction represents an attractive outcome for our shareholders by providing a cash takeout at a substantial premium while supporting Nielsen’s commitment to our clients, employees and stakeholders.”

According to the terms of the agreement, Nielsen has 45 days to consider alternative takeover offers. If the company decides to take up a higher offer, it will have to pay $102 million to the consortium as termination fees.

The acquisition is expected to close in the second half of this year, following which Nielsen will stop trading on the New York Stock Exchange.

About Nielsen

Headquartered in New York, Nielsen provides marketing data collection and analytics services across the world. The company collects data about what consumers watch and buy and offers this consumer behavior and marketing information to its clients in the form of ratings.

Wall Street Weighs In

Following the announcement on Tuesday, Morgan Stanley (NYSE: MS) analyst Toni Kaplan upgraded the rating on the stock to Hold from Sell with a $28 price target (4.8% upside potential).

Overall, the stock has a Hold consensus rating based on one Buy, six Holds and one Sell. NLSN’s average price target of $22.71 implies 15% downside potential. Shares have gained 40.1% over the past six months.

Hedge Fund Trading Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Nielsen is currently Very Positive, as the cumulative change in holdings across all six hedge funds that were active in the last quarter was an increase of 2.1 million shares.

Conclusion

This deal will better position Nielsen to assess the constantly changing consumer behavior across all channels and platforms, and develop better measures to provide the same to its clients.

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