Dun & Bradstreet (DNB) (~$3.8B market cap) is a supplier of economic knowledge to enterprise and authorities shoppers, 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 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), knowledge to investigate 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 many others., all issues that typically entice individuals to knowledge firms, nevertheless, they’re gradual rising and appear to be perpetually in turnaround mode.
Final August, D&B confirmed stories they’d acquired 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 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 different constructions the place D&B sells their two items (Finance & Danger and Gross sales & Advertising and marketing) to strategic patrons; all alongside the way in which there have been stories or firm disclosures of each strategic and monetary patrons exhibiting curiosity in D&B. Within the firm’s latest earnings name, administration talked about the method was making a distraction (blamed it for impacting new enterprise, resulting in a slow-to-no progress quarter) and that the method could be full by the tip 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 fascinating event-driven setup.
D&B isn’t any stranger to non-public markets and the leveraged finance group (hopefully making it simple to finance a deal), it was taken-private in 2019 by a consortium led by Invoice Foley (of FNF, FIS, and many others fame) through 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 Government 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 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 might present a catalyst to shut the NAV hole (individually, one other CNNE holding, Paysafe (PSFE) can 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 knowledge aggregators may present.
Restructuring fees and transition prices add-backs make up nearly 10% of adjusted EBITDA. Nevertheless, 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 progress, I believe $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 (larger 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 (doubtlessly 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
