Acxiom Board Again Rejects ValueAct Bid

by Lance Turner  on Tuesday, Dec. 20, 2005 11:49 am  

Acxiom Corp. of Little Rock said Tuesday that its board of directors has unanimously rejected ValueAct Capital's proposal to buy the company for $25 per share.

Acxiom announced its decision in a news release here. It is the second time the board has rejected a buyout offer from the investor group. It previously rejected an offer of $23 per share.

The latest offer amounted to a deal worth about $2 billion. Acxiom said the offer from the San Francisco-based group was "not in the best interest of Acxiom's shareholders, clients or associates."

Shares of Acxiom (Nasdaq: ACXM) closed Monday at $22.64.

The company said it made its final decision on Monday after a series of recent meetings on the matter.

ValueAct's latest offer came in October on the heels of Acxiom's second-quarter earnings report, in which Acxiom reported pretax profits of $12.4 million, a 58 percent drop from profits in the same quarter last year. But $15.8 million in one-time charges weighed on results, which many analysts anticipated.

In letter accompanying the new offer, ValueAct managing partner Jeffrey Ubben said, "The second-quarter results reported on October 19th further confirm our belief that assets are being poorly deployed, opportunities missed, and that shareholder value is being eroded by current management."

Ubben went on to lay out complaints about the company's management and announced a new executive team ValueAct would install should it take over the company. Ubben expanded on those complaints in an interview with Arkansas Business published Oct. 31.

Acxiom said it began meeting on ValueAct's latest offer on Nov. 2, agreeing that the issues raised in ValueAct's new offer required "additional analysis." The board said it met five more times on the matter, meeting with ValueAct representatives, talking with Acxiom's senior management and examining the company's "financial road map."

"The board determined that Acxiom's current strategy positions the corporation well for success in both the short and long term," Acxiom Board Chairman and Company Leader Charles D. Morgan said in the Tuesday news release. "Each of the board members worked hard to understand all aspects of the situation and, among other things, considered the viewpoints of [ValueAct] as well as Acxiom's management, and in so doing made the decision it believes will produce the best outcome for Acxiom's shareholders, clients and associates."

The board listed several key factors in its decision to reject ValueAct's offer:

• "Confidence in management's ability to deliver improving financial results based on Q2 performance and quarter-to-date momentum for Q3, which ends December 31, prospects for Q4 of fiscal 2006, and prospects for fiscal 2007;

• "Continuing focus on the execution of the previously announced expense management initiatives;

• "Confirmation that the company's investment in grid technology would soon be validated through a long-term development and go-to-market strategic relationship with a major technology company;

• "Confidence in the company's ability to achieve the aggregate fiscal 2006 and longer-term goals of its financial road map; and

• "Input from major clients on the potential disruption associated with VA proposal."

Acxiom is scheduled to announce third-quarter results on Jan. 25.



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