Why Arbitron Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of radio ratings provider Arbitron (NYSE: ARB  ) surged 23% today after TV counterpart Nielsen Holdings (NYSE: NLSN  ) agreed to acquire it for about $1.3 billion.

So what: The all-cash deal values Arbitron at $48 per share and represents a 26% premium to its closing price on Monday. Nielsen is making the move to expand into unmeasured areas of media consumption like streaming audio, and judging by its own stock's small gain today, Wall Street seems pleased with the price being paid to do it.

Now what: The deal is expected to add roughly $0.13 to Nielsen's adjusted EPS one year after the close, with cost synergies of at least $20 million. "U.S. consumers spend almost 2 hours a day with radio. It is and will continue to be a vibrant and important advertising medium," said Nielsen CEO David Calhoun. So while Arbitron shares are likely to be all popped out, Nielsen's new metrics might be a particularly sound source of long-term growth.

Interested in more info on Arbitron? Add it to your watchlist. On Nielsen? Add it to your watchlist.


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