What's going on?
On Monday, Elliott Management Corporation – an activist investor – revealed it had an 8% stake in Nielsen Holdings. Shares of the US-listed data and analytics company rose by 13%.
What does this mean?
Nielsen’s probably best known for tracking television ratings, which affect how much companies have to pay to advertise during prime time shows, for example. The company returned to the stock market in 2011, after spending a few years privately owned.
Last month, Nielsen’s shares fell by 27% as it reported weaker-than-expected quarterly results and announced a “strategic review” of about half of its business (a review like this often leads to drastic restructuring or selling off parts of the business that aren’t performing).
Why should I care?
For markets: Diamonds are formed under high pressure.
Elliott’s amassed a sizeable chunk of Nielsen’s shares, hoping to influence what the company does next. The activist’s big idea is to get the company to sell itself – several private equity investors (who want to take it private again) are interested in buying, according to a report from The Wall Street Journal. Nielsen’s stock price has fallen some 40% this year, but likely rose as other investors hoped the pressure for a major shareholder could spur the company into selling action (companies tend to be acquired at a higher value than the current share price).
The bigger picture: Icahn? Maybe you cahn’t.
Activist investors may be used to getting their own way when they present their plans to companies, but billionaire investor Carl Icahn might not be so lucky. He’s trying to stop the $54 billion takeover of Express Scripts by Cigna – arguing that the US health insurer is paying too much for the company (which acts as an intermediary between drug companies and insurers) because of potential regulatory changes and competition from Amazon. However, it looks like support from other shareholders might outweigh his objections.