The blockbuster news that Nielsen may be hitting the sale block, with stocks and options totaling 8.4% of the publicly traded company lapped up by activist shareholder Elliott Management Corp., has been followed by a downgrade of the measurement giant’s stock from Buy to Hold by Pivotal Research Group analyst Brian Wieser.
Pivotal regards its “Hold” rating as “a realistic goal as we think that there will be buyers who see that Nielsen’s Buy segment can ultimately return to growth and see greater value in the combined Watch and Buy segments than in each of them separately.”
Further, Wieser says, “Conversations with investors over the past few weeks have conveyed to us that longer-term oriented non-activist investors would not only welcome, but would probably demand significant managerial change well beyond the departure of the company’s CEO, if Nielsen is to remain as a public company focused solely on its Watch businesses.”
The research firm believes that Elliott will ultimately find “widespread support in Nielsen actively putting itself up for sale, as investors are generally frustrated with what has appeared to be Nielsen’s inability to monitor (or manage) warning signs in its businesses and in the company’s approach to innovations, which failed to anticipate its customers’ needs as much as investors might have expected they should have.”
Run by hedge fund billionaire Paul Singer, the activist investor said in a regulatory filing that he will “encourage the issuer to undertake a full strategic review of, and initiate a process to explore (a) sale,” as Inside Radio reported Tuesday.
That sent Nielsen’s shares up 12% Monday to close at $24.62 on more than five times its normal volume. Bloomberg says it was the company’s biggest rally since it first went public in 2011. Elliott Management bulked up on shares of Nielsen the day after the company’s stock fell 25% on July 26, wiping out more than a quarter of its market value. That followed Nielsen’s “disappointing” second quarter results release July 26, along with CEO Mitch Barns announcing he will step down by the end of the year after 21 years with the company – the past four as its chief executive. Overall revenue for the company was at $1.6 million, down 0.7% year-over-year.