Dun & Bradstreet (DNB) (~$3.8B market cap) is a supplier of economic knowledge to enterprise and authorities purchasers, they’re recognized 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 really helpful or generally 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), knowledge to research provide chains and company info supplying many CRM or ERP platforms. It is a pretty good enterprise that includes recurring income, excessive retention charges, excessive incremental margins on revenues, and so on., all issues that typically entice individuals to knowledge firms, nonetheless, they’re gradual rising and appear to be perpetually in turnaround mode.
Final August, D&B confirmed studies that they had obtained inbound curiosity from third events and had employed Financial institution of America to help with working a strategic course of. We’re eight months into that course of, a couple of 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 various buildings the place D&B sells their two items (Finance & Threat and Gross sales & Advertising) to strategic consumers; all alongside the way in which there have been studies or firm disclosures of each strategic and monetary consumers 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 can 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 personal markets and the leveraged finance neighborhood (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) by way of his Cannae Holdings (CNNE). The corporate’s day out of public markets was brief lived, it was re-IPO’d the next yr with Invoice Foley being the Govt Chairman. Foley’s Cannae Holdings is a HoldCo of his investments which has perpetually traded at a reduction to its sum of the elements worth (not a nasty 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 might 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 pretty 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 knowledge aggregators would possibly present.
Restructuring prices and transition prices add-backs make up nearly 10% of adjusted EBITDA. Nonetheless, even utilizing the non-adjusted EBITDA quantity, the corporate seems to be 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 feel $800MM in true EBITDA is an affordable expectation.
D&B has $3,344MM in web debt, the enterprise worth is ~$7.1B, making the EV/EBITDA a number of within the 9x vary, low-cost for a recurring income knowledge 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 as if an affordable “heads I win (probably quite a bit) and tails I do not lose a lot” (assuming a 6+ month holding interval to churn out any damaged arb promoting) state of affairs.
Disclosure: I personal shares of DNB