Dun & Bradstreet’s largest shareholder, Chicago-based Harris Associates L.P., has challenged D&B to take steps to maximize shareholder value, possibly by offering the company up for sale, either in parts or as a whole unit.
In a letter to D&B chairman & CEO Volney Taylor dated Aug. 30, Harris requests that D&B “engage an investment bank to solicit offers for the Corporation to maximize the value of [Dun & Bradstreet] for its shareholders.” Harris holds a 12.5% stake in D&B through its Oakmark, Oakmark Select and other funds. A spokesperson for D&B acknowledged that it had received the letter, but declined to comment further.
In an interview with DIRECT Newsline, Oakmark Select Fund portfolio manager and Harris Associates partner Bill Nygren said that given the recent acquisition of Neilsen Media Research by VNU for 15 times its cash flow, the value of Dun & Bradstreet could reach $60 billion.
“Maybe we are wrong on the $60 billion figure, but you see a lot of inferior businesses selling at nine-to-ten times earnings,” said Nygren.
The letter, filed as part of a 13-D statement by Harris with the SEC, states that “the DNB operating company still has, in HALP’s opinion, substantial operating problems,” despite the prospects of D&B’s DUNS number, which serves as a universal identifier for corporations, and DNB’s marketing, risk management and transaction enabling functions.
The letter recognizes the strength of D&B’s Moody’s credit-rating business, but further says that Moody’s “performance is going unrecognized and unrewarded in the shadow of DNB operating company’s problems.” Harris Associates further speculates that, given the strength of the division’s earnings growth, “a strategic buyer might well pay more than DNB’s current market value for Moody’s alone.”
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