JP Morgan is leading the $1.47bn TLB due 2028 that is talked at S+600bp at an OID of 92-93. UBS is leading the $500m-equivalent euro tranche, with the same price talk. Proceeds of the B2/B/BB loans will fund the acquisition, including repaying GfK’s existing €650m TLB.

The purchase of GfK, officially announced last summer, is intended to further entrench the standalone NielsenIQ as the go-to name for consumer data and insights that brands use to inform their marketing strategies.

Bankers had initially teed up syndication of the debt for late September, a month that started promisingly, with banks offloading the TLB portion of Citrix’s buyout debt, but then deteriorated amid negative inflation data.

The timing of syndication was then pushed back to 2023 — much to the underwriters’ benefit, as the primary loan market has come back to life in the past couple of weeks.

The delayed timing also allowed NielsenIQ’s new chief financial officer, Michael Burwell, to run the deal after taking over the role at the start of this year. Burwell has prior capital markets experience at health analytics company Datavant and insurance company Willis Towers Watson.

Commitments are due next week on February 9, but early indicators are that it is being well received — especially among CLOs who like its mid to high single-B corporate family ratings of B2/B/B+.

A source close to the deal said the book had good momentum so far: “It’s early days, but lots of different pockets are looking, given the pricing.” Other sources familiar with the situation said they expected orders to ramp up after today’s FOMC meeting.

Debt for data

The GfK acquisition is expected to turn NielsenIQ into a more powerful and cash-generative company, in a sector where scale is the name of the game. Still, the increase in leverage is a concern for some.

While the new debt takes out GfK’s legacy loans, it also adds to the $1.95bn of loans NielsenIQ issued to fund its spin-off by Advent in 2021, and the $1.7bn of new debt it subsequently added in November that same year.

Leverage is marketed at 3.8x based on combined pro forma EBITDA of $939m, according to two sources familiar with the deal. And aside from the company’s upsized revolver, which matures in 2026, all of its debt comes due in 2028 — a steep maturity wall.

“It’s a lot of leverage and restructuring costs,” one existing holder said. “But it is a business that will exist and continue to exist, and I expect we’ll be paid quite well to add to our existing position.”

The $939m EBITDA figure includes roughly $82m of synergies, sources said. As always in these situations, you can’t count synergies until they hatch — so it’s a good sign that NielsenIQ is on a successful self-improvement flex.

“There is significant integration and execution risk, especially because the company has many ongoing transformation projects,” Fitch noted in its report. “However, the execution over the past 18 months is a good indication that success is within reach.”

Concentration

A couple of years ago, Nielsen was in danger of losing its status as the leading provider of consumer data and insights. Competitors like IRi and Kantar were taking market share — so the company embarked on a transformation, splitting in two.

NielsenIQ would focus on providing data and insights to brands in the consumer packaged goods, manufacturing and retail space; legacy Nielsen (now owned by Brookfield and Evergreen Coast) would focus on TV and digital streaming data.

“The old business had no focus, and the powerful brand name was carrying it,” said a credit analyst. “Since they separated, they’ve put more focus into the business and improved the data collection.”

Now, NielsenIQ is to scale up through this acquisition to capture more data with more granularity — operating across a broader set of industries and geographies to better cater to clients’ consumer insight demands.

“The consumer packaged goods companies are no longer looking for a cookie-cutter approach to apply across the country,” the analyst said, explaining the theory behind NielsenIQ’s pursuit of scale.

“[The data they want] is more targeted, it's very region and location-specific. It depends on the demographics, income levels and shopping preferences — and all this data becomes more important in how it's collected, and how to dissect it.”

Positive early results

Investors are impressed with NielsenIQ’s turnaround so far in the nearly two years since the spin-off. Its cost-saving program is ahead of schedule, which bodes well for the anticipated GfK synergies.

Over the past couple of years, Nielsen IQ has executed cost savings of $247m ($90m of which came before the 2021 spinoff), according to Fitch; it is now expected to implement nearly $500m of total savings, the agency said.

At the same time, Nielsen has upgrade its technology stack to better compete. Several bolt-on acquisitions of Label Insights, Cornerstone, Data Impact and Rakuten Intelligence have led to renewals of its largest clients, Fitch noted.

Now Nielsen can apply that same tech stack to GfK’s existing client base and data, acheiving even greater scale. “Nielsen has invested in the technology quite intensely, and that brings an upside to both businesses when that technology is integrated,” the analyst said.

Not only will NielsenIQ benefit from lower costs and more revenue as part of this merger, but it will also have greater global geographic diversity with operations in about 80 countries.

And while industry diversity is still highly concentrated in large consumer goods companies, the acquisition does provide some diversification into GfK’s clients in technology and durables.

“It's a very tricky business nowadays,” the analyst said. “The more data, and the more granular data you can get on specific areas, the better the outcome will be.”

Advent International, JPMorgan and UBS declined to comment. NielsenIQ did not respond to a request for comment.