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Transaction
Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study 85

SOKOLOFF & COMPANY CASE STUDY
Golden Gate Capital and GIC (Government of Singapore Investment Corp) Acquires Neustar, Inc. (NYSE:NSR)

DATE ANNOUNCED: December 14, 2016
BUYER: Golden Gate Capital and GIC (Government of Singapore Investment Corp)
SELLER: Neustar, Inc. (NYSE: NSR)    
PURCHASE PRICE: $2.9 Billion
FORM OF PURCHASE PRICE: $33.50 per share in cash

SELLER’S FINANCIAL INFORMATION AND M&A MULTIPLES

Year

2014

2015

Trailing Twelve Months
through
December 31, 2016*

Revenue

$963.59M

$1.05B

$1.21B

Adjusted EBITDA

$381.58M

$408.81M

$545M

Cash

 

 

$58.49M

Debt

 

 

$922.86M

Enterprise Value

 

 

$2.9B

Multiple of Revenue

 

 

2.40

Multiple of EBITDA

 

 

5.32

*Based on Q3 Guidance for the full 2016 calendar year provided by Neustar.

TRANSACTION DRIVERS

Since the beginning of 2011, Neustar has been implementing a plan to leverage the Company’s position in Order & Inventory Management and real-time Numbering Service. Lisa Hook, Neustar’s President and CEO said “We believe this transaction will enable us to continue to execute against our strategy and strengthen our market position as a leader in marketing, risk, security and communication solutions.

SOKOLOFF COMMENTARY:

Neustar is amidst a crisis driven transformation brought about when the FCC awarded the long held NPAC (Number Portability Administration Center) contract to Ericsson in 2015.  NPAC accounts for almost half of NSR’s revenues and more than half of its EBITDA.  The current contract is expected to be fully turned over from NSR to Ericsson’s Telcordia unit in 2018.

Losing NPAC was a shock to NSR who held the contract since local number portability was first allowed in 1996.  It is a complex system overseeing some 500 million phone numbers.  Under NSR, local number portability became an easy fact of life for consumers, with transfers routinely taking minutes.  Many industry insiders question whether Telcordia will be able to take over NPAC administration without major challenges and delays for consumers.
Going private is by far the best avenue for Neustar.  There will be ups and downs ahead as the transformation continues; public investors react poorly to such uncertainties. 

Good luck to Lisa Hook and her team.

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