Elliott Management accumulates large stake in Nielsen

Activist hedge fund Elliott Management has accumulated a large ownership stake in the information-measurement giant Nielsen Holdings (NLSN) as it urges the company to explore a sale.

According to the reports by Wall Street Journal, the New York-based hedge fund believes that Nielsen’s Buy segment, that follows and analyzes consumer behaviors related to retail purchases and preferences, was unable to keep up with the pace of its key competitor IRI, a market-research firm. Elliott amassed a huge stake of 8% in Neilsen, which equates to over $640 million.

Nielsen has been struggling to post significant growth, mainly due to a rapidly changing retail environment. In the recently ended second quarter, the company posted revenue of $1.6 billion that inched up just 0.6% year over year, whereas the Wall Street analysts had expected a 4% boost in the revenue to about $1.71 billion. The adjusted earnings fell 47% at $0.20 per share, below estimates of $0.37 per share.

Nielsen has been struggling to post significant growth, mainly due to a rapidly changing retail environment

Further, the company surprised the investors with the announcement of the retirement plans of the current CEO Mitch Barns towards the end of 2018. Separately, the company also revealed its plans of conducting a strategic review of its underperforming Buy segment that posted a revenue decline of 4% year over year to $789 million. The segment also generated an operating loss of $3 million.

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By spinning off the struggling unit, Nielsen — the S&P 500’s third-worst performer in 2018 — can better manage its Watch segment, the media-tracking unit, which witnessed a 4.5% revenue growth in the second quarter.

Shares of Nielsen, which encountered a new 52-week low ($20.53) on July 26, surged about 10% in the first hour of morning trading session.