Dun & Bradstreet (DNB) (~$3.8B market cap) is a supplier of economic knowledge to enterprise and authorities purchasers, they’re identified for his or her DUNS quantity identifier which capabilities as a social safety quantity or CUSIP for business 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 business 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 many others., all issues that usually appeal to individuals to knowledge firms, nonetheless, they’re gradual rising and appear to be perpetually in turnaround mode.

Final August, D&B confirmed reports they had received inbound interest from third parties 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 buy 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 reviews or firm disclosures of each strategic and monetary consumers exhibiting 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 could 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 is not any stranger to non-public markets and the leveraged finance group (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 many others fame) by way of his Cannae Holdings (CNNE).  The corporate’s trip of public markets was brief lived, it was re-IPO’d the next 12 months 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 components worth (not a nasty comp for what Invoice Ackman is making an attempt to do with HHH), final 12 months 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 may 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 lovely entry level for D&B, the corporate is fairly aggressive with their adjusted financials, so whereas low-cost, it isn’t fairly as low-cost as administration or knowledge aggregators may present.

Restructuring costs and transition prices add-backs make up virtually 10% of adjusted EBITDA.  Nonetheless, even utilizing the non-adjusted EBITDA quantity, the corporate seems 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 internet 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 (increased 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 so much) and tails I do not lose a lot» (assuming a 6+ month holding interval to churn out any damaged arb promoting) scenario.

Disclosure: I personal shares of DNB