Sale of Alltel Tops List of 2007 Deals

by John Henry  on Monday, Jan. 21, 2008 12:00 am  

Acxiom stockholders were to receive $27.10 in cash for each outstanding share of stock, a 21 percent per share premium over Acxiom's average closing price during the previous month.

But as Acxiom turned in two consecutive quarters of poor earnings and its stock began to slip, the word "arbitrage" began to be bandied about. Investors widened the spread between the market price and the acquirers' offer, indicating faltering confidence that the shares would soon be worth $27.10.

Acxiom's poor quarterly results combined with the nationwide credit crunch undid the deal. On Oct. 1, the obvious became reality as the private equity firms bailed out and the buyout was called off.

Since the deal fell through, Acxiom's stock has continued to plunge, dipping below $10 a share last week.

The company did get $65 million in breakup money, but that was negotiated down from $110 million, which implied that the management of Acxiom bore a significant share of the blame. The $65 million payment ranks No. 18 on the list of 2007's biggest deals.

Charles Morgan, who led the company for more than 30 years, resigned in November as both chief executive and chairman of the board in exchange for a $3 million buyout He was to continue receiving his annual salary of $815,000 until a replacement was hired and then $500,000 per year during a three-year consulting contract. Last week, Acxiom named John Meyer, 51, its new CEO. Meyer, who lives in Dallas, will move to Little Rock and is scheduled to take the helm Feb. 4.

If the deal had gone as planned, Morgan would have received more than $80 million in cash, but as the share price dropped, so did Morgan's Acxiom fortune - to less than $33 million.

Wal-Mart Transactions

Wal-Mart Stores Inc., which often as not leads Arkansas Business' annual list of biggest deals, made a couple of deals this year. In February, the retail giant agreed to a $1.2 billion transaction with Bounteous Co. Ltd. of Taiwan to purchase a 35 percent stake in its Trust-Mart stores in China. Under the agreement, Wal-Mart would acquire control of the chain by 2010, subject to certain conditions in the agreement.

Bounteous operates 101 "hypermarkets" in 34 Chinese cities under the Trust-Mart brand. In 2005, Trust-Mart had sales of $1.7 billion. Trust-Mart would continue to operate under that name, but it and Wal-Mart will both open new stores in China, one of the world's fastest-growing retail markets.

Wal-Mart already employed 37,000 people through its 68 Supercenters, three Sam's Clubs and two Neighborhood Markets in 36 Chinese cities.

In October, Wal-Mart bought the remaining shares of Seiyu Ltd. of Japan for $900 million. Seiyu has been struggling in Japan, and Mike Duke, vice chairman of Wal-Mart, said the company believes full ownership of Seiyu is the best way for both companies to "accelerate the delivery of long-term benefits" to customers, employees and business partners.



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