Acxiom Finds Itself in Period of Uncertainty

by Mark Friedman  on Monday, Jan. 7, 2008 12:00 am  

In May, Acxiom announced it was going private and would be sold to ValueAct and Silver Lake in a $3 billion deal.

Acxiom's announced sale was part of a string of private-equity firms gobbling up companies and a number of Wall Street banks agreeing to finance the purchases.

The Acxiom deal got off to a shaky start as one of Acxiom's investors, MMI Investments LP, which owned about 8.9 percent of the company at the time, said it wouldn't support the sale, saying the $27.10 price per share was too low.

MMI later changed its position and supported the sale. It also increased its holding in Acxiom to 9.7 percent.

But a date for shareholders to approve the deal was never set. The vote date wasn't needed because a combination of events derailed the sale.

By August, the global credit crunch hit, and a number of Wall Street banks became uneasy about financing deals. A number of agreements involving the sale of publicly traded companies started falling apart over the summer.

To make matters worse, the financial services segment fell into turmoil.

"We knew that our banking customers were concerned about the subprime prices and what impact that might have globally on their business," Morgan said. "So we were watching it pretty closely, knowing it put us at risk."

He said the financial services customers pulled back on spending, which triggered a drop in Acxiom's earnings.

For the first two quarters of fiscal 2008, Acxiom's balance sheet wasn't as healthy as it had been in fiscal 2007.

In the first quarter of fiscal 2008, which ended June 30, Acxiom reported a loss of $11.5 million, which included $15.1 million in costs related to the pending sale. Still, without the unusual expenses, Acxiom would have made $9.1 million in the quarter, though that would have been off nearly 50 percent from the same quarter in fiscal 2007.

And Acxiom's earnings in the second quarter of fiscal 2008 were off about 50 percent from the same period in fiscal 2007.



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