Layoffs, Takeover Bid, Trial Ensure Acxiom's Place in Headlines

by Chip Taulbee  on Monday, Jul. 18, 2005 12:00 am  

Get used to reading about Acxiom Corp.

Last week, the company disclosed quarterly earnings well below analysts' expectations, announced its fourth major round of job cuts in six years and became the target of a takeover bid.

Meanwhile, the trial began for alleged hacker Scott Levine, recounting Acxiom's role as victim in the largest-ever data security breach.

On Tuesday, the information management services company warned investors that first-quarter results would be below expectations: 6 cents per share on revenues of $310 million instead of analysts' expectation of 16 cents per share on $324 million in revenue.

Acxiom softened the blow to investors by announcing a belt tightening of $60 million in annual expenses; 30 percent of that savings will come from a 4 percent reduction in the company's 6,000-person work force, including 100 jobs in Arkansas.

The company also sold one of its three corporate jets in the first quarter, plans to cut down on travel and entertainment costs - up $1.5 million in the first quarter compared with the same period last year - and could ax the sponsorship of its Nascar Craftsman Truck Series team. Acxiom head Charles Morgan and son Rob Morgan no longer have ownership in the Nascar racing team.

Unimpressed with recent efforts to save, ValueAct Capital Partners LP, Acxiom's largest shareholder, said in a filing with the Securities & Exchange Commission on Tuesday that it had made an offer to acquire the rest of the information management services company for at least $23 per share.

In the filing, ValueAct questioned Acxiom leadership's ability to continue running an operation Morgan helped build from a small data processing outfit in the early 1970s to a Fortune 500 company.

"We believe that for Acxiom's potential value to be realized, it is imperative that the company be transitioned from a founder-run operation to a professionally managed business with increased sophistication in strategic, operational and financial management," the filing said.

ValueAct, which owns about 10.4 percent of Acxiom's stock, has a history of taking over undervalued companies and retooling management to improve results.

Acxiom is ValueAct's fourth takeover target in the past 19 months. Most recently, ValueAct bought El Paso car ignition maker MSD Ignition in April for $141 million. Its bid to acquire Acxiom is the first takeover offer in Acxiom's 36-year history.

ValueAct already indicated in June that it wanted to purchase all remaining shares of Acxiom, but in Tuesday's filing ValueAct indicated it had all but locked up the funds, citing a highly confident letter from UBS Securities LLC of New York for debt financing of at least $1.6 billion.

ValueAct also won another moral victory against Acxiom on Tuesday when the Little Rock company cited sluggish sales in Europe as the biggest cause for a poor first quarter. ValueAct managing partner Jeffery W. Ubben, in a June letter to Morgan, had criticized Acxiom's management for acquiring a pair of European operations, Claritas and Consodata, in early 2004.

Morgan has assured employees that the company was not being shopped to potential buyers, but company filings indicate that he and the board of directors will acknowledge their fiduciary responsibility to shareholders by meeting with ValueAct to consider the offer.

Should the board refuse, ValueAct could leave the decision to Acxiom shareholders with a tender offer.



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