Dun & Bradstreet (DNB) (~$3.8B market cap) is a supplier of business information to enterprise and authorities purchasers, they’re identified for his or her DUNS quantity identifier which features as a social safety quantity or CUSIP for industrial entities. The DUNS quantity is pretty ubiquitous in enterprise (D&B tracks roughly 600 million entities worldwide), the identifier is advisable or typically required by industrial and governmental organizations to do enterprise with one another. D&B does different issues like present credit score scoring for small-and-medium sized companies (Paydex rating), information to research provide chains and company data supplying many CRM or ERP platforms. This can be a pretty good enterprise that includes recurring income, excessive retention charges, excessive incremental margins on revenues, and so on., all issues that typically appeal to individuals to information corporations, nonetheless, they’re gradual rising and appear to be perpetually in turnaround mode.
Final August, D&B confirmed reviews that they had obtained inbound curiosity from third events and had employed Financial institution of America to help with operating a strategic course of. We’re eight months into that course of, a few month in the past Bloomberg reported Veritas Capital is in talks to purchase D&B for roughly the present market cap on the time, or $5.4B plus debt, which is roughly $12.25/share. The article additionally hints at different constructions the place D&B sells their two items (Finance & Threat and Gross sales & Advertising) to strategic patrons; all alongside the best way there have been reviews or firm disclosures of each strategic and monetary patrons displaying curiosity in D&B. Within the firm’s current earnings name, administration talked about the method was making a distraction (blamed it for impacting new enterprise, resulting in a slow-to-no development quarter) and that the method could be full by the top of the quarter. The market did not just like the excuse and together with a broader selloff in markets, DNB now trades for $8.50/share making this an attention-grabbing event-driven setup.
D&B isn’t any stranger to non-public markets and the leveraged finance group (hopefully making it straightforward to finance a deal), it was taken-private in 2019 by a consortium led by Invoice Foley (of FNF, FIS, and so on fame) through his Cannae Holdings (CNNE). The corporate’s day trip of public markets was quick lived, it was re-IPO’d the next yr with Invoice Foley being the Government Chairman. Foley’s Cannae Holdings is a HoldCo of his investments which has perpetually traded at a reduction to its sum of the components worth (not a foul comp for what Invoice Ackman is attempting to do with HHH), final yr they internalized the administration construction and introduced Foley on as CEO formally. D&B is Cannae’s largest holding (~1/third of the portfolio), monetizing this funding may present a catalyst to shut the NAV hole (individually, one other CNNE holding, Paysafe (PSFE) can also be rumored to be offered).
The present market selloff has created a sexy entry level for D&B, the corporate is fairly aggressive with their adjusted financials, so whereas low-cost, it is not fairly as low-cost as administration or information aggregators may present.
Restructuring prices and transition prices add-backs make up nearly 10% of adjusted EBITDA. Nevertheless, even utilizing the non-adjusted EBITDA quantity, the corporate appears fairly low-cost at present costs even when a deal fails to recover from the end line. Administration is guiding to $955-$985MM in adjusted EBITDA in 2025, if we again out a few of these changes and assume some underlying development, I believe $800MM in true EBITDA is an affordable expectation.
D&B has $3,344MM in internet debt, the enterprise worth is ~$7.1B, making the EV/EBITDA a number of within the 9x vary, low-cost for a recurring income information mannequin (greater high quality ones commerce for double this valuation). Who is aware of how far the present market fall will go, however this looks like an affordable “heads I win (doubtlessly lots) and tails I do not lose a lot” (assuming a 6+ month holding interval to churn out any damaged arb promoting) scenario.
Disclosure: I personal shares of DNB
