Nielsen Files for a $1.75 Billion Initial Public Offering

Market research firm Nielsen filed for an initial public offering Thursday. While the terms have yet to be set, the offering could raise as much as $1.75 billion. The lead underwriters include J.P. Morgan (JPM) and Morgan Stanley (MS).

Back in March 2006, during the late stages of the credit bubble, Nielsen agreed to a $10.2 billion leveraged buyout. The deal involved many of the heavy-hitters of private equity, including AlpInvest Partners, The Blackstone Group (BX), The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co. and Thomas H. Lee Partners. All in all, it was a typical mega-transaction.

But the markets subsequently seized up and the economy fell into a horrible recession. For private equity deals, it was certainly a brutal time. Now things are starting to warm up again and private equity operators are testing the waters.

Nielsen's Global Platform

It was in 1923 that marketing pioneer Arthur C. Nielsen started his company Nielsen. His vision was to build tools to measure the effectiveness of marketing (his innovative concept was known as "market share"). The timing was perfect and the company grew quickly, especially with the emergence of television. As a result, the so-called "Nielsen Ratings" became a ubiquitous brand.

However, by 2006 the company was at a crossroads. Should it divest its many assets or maintain its integrated structure? In light of the fragmentation of media -- driven by the Internet -- Nielsen decided on the latter approach.

So far, things have worked out. From 2007 to 2009, revenues have gone from $4.4 billion to $4.8 billion and adjusted EBITDA has increased from $1 billion to $1.3 billion. Then again, Nielsen's CEO David Calhoun is a top-notch executive. Before coming on board in late 2006, he was a vice chairman of General Electric (GE) and president and CEO of GE Infrastructure.

Prospects for the IPO?

Nielsen provides its marketing information and analytics services in roughly 100 countries. The average length of the relationship of its top ten customers -- which include Coca-Cola (KO), NBC Universal, Nestle S.A., News (NWS), Procter & Gamble (PG) and the Unilever Group -- is more than 30 years.

And while Nielsen is a fairly mature company, there are certainly growth opportunities. For example, there is much room for expansion in emerging markets like India, Brazil, Russia and China. Next, the increased use of mobile devices and social networks will require accurate approaches to measurements.

However, there is a major issue: The IPO market is shaky now. Even top-tier companies are having trouble raising capital at strong valuations. Further, there are signs that the credit markets are getting tighter.

But the Nielsen offering is not likely to hit the markets until the fall. And as seen over the past couple of years, the IPO window can open quickly as the markets improve.
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