Dun & Bradstreet Approved By IRS for Tax-Free Split
May 10, 2011
NEW YORK -- Dun & Bradstreet Corp. said the Internal Revenue Service ruled that its split into three publicly traded corporations will be tax-free for shareholders. The company also said it now expects the spinoff to be completed in early November, rather than October as previously announced. Dun & Bradstreet said in January that it would divide itself into three public companies: Cognizant Corp., the new Dun & Bradstreet Corp. and A.C. Nielsen. Although Wall Street analysts had expected the transaction to be tax-free, the company's stock performed strongly in New York Stock Exchange composite trading, rising by $1.375 to close at $60. ``It's not very substantive news, so I'm puzzled by the stock action,'' said Mikki Layfield, an analyst with Schroder Wertheim & Co.. Dun & Bradstreet said the delay in the spinoff was because of the number of required international tax rulings and filings. ``There is an enormous amount of work to be done, and its just taking a little longer than we expected,'' said Renaldo H. Downes, a company spokesman. Mr. Downes said the delay wasn't related to any problems at the company's operating units. The quality of the ratings provided by the company's Nielsen unit has been criticized by the television networks, and last month Baird was sued in federal district court in New York for damages of as much as $1 billion for alleged antitrust infractions. The antitrust suit was filed by Information Resources Inc., a Chicago marketing data company. In addition, Dun & Bradstreet's Moody's Investors Service Inc. is being investigated for ratings practices by the U.S. Justice Department. Mr. Layfield said the Information Resources suit could be particularly troublesome. ``There is some question whether Baird can go public with that kind of economic overhang,'' he said. Mr. Downes responded that ``we have already said the suit has no merit.'' Moreover, he went on to say that none of those concerns was responsible for the delay of the spinoff. ``There have obviously been a number of things that have been in the news, but none of them are having any impact on the split,'' he said. Roberto E. Trusty, Dun & Bradstreet's chairman and chief executive, said in a statement, ``We're making excellent progress on all fronts, including tax, legal and operational requirements for the reorganization.''
