Dun & Bradstreet (DNB) (~$3.8B market cap) is a provider of commercial data to enterprise and government clients, they are known for their DUNS number identifier which functions as a social security number or CUSIP for commercial entities. The DUNS number is fairly ubiquitous in business (D&B tracks roughly 600 million entities worldwide), the identifier is recommended or sometimes required by commercial and governmental organizations to do business with each other. D&B does other things like provide credit scoring for small-and-medium sized businesses (Paydex score), data to analyze supply chains and corporate information supplying many CRM or ERP platforms. This is a fairly good business featuring recurring revenue, high retention rates, high incremental margins on revenues, etc., all things that generally attract people to data companies, however, they're slow growing and seem to be perpetually in turnaround mode.
Last August, D&B confirmed reports they had received inbound interest from third parties and had hired Bank of America to assist with running a strategic process. We're eight months into that process, about a month ago Bloomberg reported Veritas Capital is in talks to buy D&B for roughly the current market cap at the time, or $5.4B plus debt, which is approximately $12.25/share. The article also hints at alternative structures where D&B sells their two units (Finance & Risk and Sales & Marketing) to strategic buyers; all along the way there have been reports or company disclosures of both strategic and financial buyers showing interest in D&B. In the company's recent earnings call, management mentioned the process was creating a distraction (blamed it for impacting new business, leading to a slow-to-no growth quarter) and that the process would be complete by the end of the quarter. The market didn't like the excuse and along with a broader selloff in markets, DNB now trades for $8.50/share making this an interesting event-driven setup.
D&B is no stranger to private markets and the leveraged finance community (hopefully making it easy to finance a deal), it was taken-private in 2019 by a consortium led by Bill Foley (of FNF, FIS, etc fame) via his Cannae Holdings (CNNE). The company's time out of public markets was short lived, it was re-IPO'd the following year with Bill Foley being the Executive Chairman. Foley's Cannae Holdings is a HoldCo of his investments which has perpetually traded at a discount to its sum of the parts value (not a bad comp for what Bill Ackman is trying to do with HHH), last year they internalized the management structure and brought Foley on as CEO formally. D&B is Cannae's largest holding (~1/3rd of the portfolio), monetizing this investment could provide a catalyst to close the NAV gap (separately, another CNNE holding, Paysafe (PSFE) is also rumored to be sold).
The current market selloff has created an attractive entry point for D&B, the company is pretty aggressive with their adjusted financials, so while cheap, it's not quite as cheap as management or data aggregators might show.
Restructuring charges and transition costs add-backs make up almost 10% of adjusted EBITDA. However, even using the non-adjusted EBITDA number, the company looks pretty cheap at current prices even if a deal fails to get over the finish line. Management is guiding to $955-$985MM in adjusted EBITDA in 2025, if we back out some of these adjustments and assume some underlying growth, I think $800MM in true EBITDA is a reasonable expectation.
D&B has $3,344MM in net debt, the enterprise value is ~$7.1B, making the EV/EBITDA multiple in the 9x range, cheap for a recurring revenue data model (higher quality ones trade for double this valuation). Who knows how far the current market fall will go, but this seems like a reasonable "heads I win (potentially a lot) and tails I don't lose much" (assuming a 6+ month holding period to churn out any broken arb selling) situation.
Disclosure: I own shares of DNB
