Nielsen to split into two companies, gets backing from investor Elliott

(Reuters) - Market research firm Nielsen Holdings Plc NLSN.N said on Thursday it would split into two publicly traded companies in a bid to boost shareholder value, a year after activist investor Elliott Management urged a sale of the company.

Nielsen, best known for its television ratings that are used to determine advertising rates for TV commercials, started exploring options from September last year, a month after Elliott disclosed a 5.1% stake in the company.

The split, which is backed by the hedge fund, initially sent the company’s shares up in premarket trading, but the stock was indicating down 1.4% at 9:00 a.m. ET.

Its Global Media business will cater to media and advertising clients, while Global Connect business will provide research data to consumer goods companies.

“Both of these companies can run faster standing on their own,” Chief Executive Officer David Kenny said in an interview. “There is very limited synergies between the two businesses.”

Kenny will lead the media business after the split and the connect business will get a new chief executive.

The transaction would be in the form of a tax-free share distribution to existing shareholders, the company said.

“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,” Elliott Partner Jesse Cohn said in a statement.

As part of the deal, Nielsen will reduce its quarterly cash dividend payment to 6 cents per share from 35 cents.

In the last 12 months, Nielsen’s media business reported $3.4 billion (£2.6 billion) in revenue and adjusted EBITDA of $1.5 billion, compared to $3.0 billion in revenue and adjusted EBITDA of $400 million at the Connect business.

Nielsen was taken private in 2006 by a group of firms that included Carlyle Group and Blackstone Group, and went public again in 2011.

J.P. Morgan Securities LLC and Guggenheim Securities LLC were the financial advisers to Nielsen. Wachtell, Lipton, Rosen & Katz, Baker McKenzie and Clifford Chance LLP were the legal advisers.

Reporting by Munsif Vengattil and Supantha Mukherjee in Bengaluru, and Joshua Franklin in New York; Editing by Arun Koyyur and Bernadette Baum