by Lance Turner
Posted 5/16/2007 09:15 pm
Updated 11 months ago
The firm announced the deal in a news release just ahead of a delayed quarterly earnings conference call.
In the release, Acxiom said it entered into a definitive agreement to be acquired by Silver Lake, an investment firm focused on technology-driven growth industries, and ValueAct Capital, the San Francisco-based investment firm that won a fight to put its leading partner, Jeffrey Ubben, on the Acxiom board.
Per the deal, Acxiom will become a private company after Silver Lake and ValueAct Capital acquire 100 percent of the outstanding equity interests in Acxiom in an all-cash transaction valued at $3 billion, including the assumption of about $756 million of debt. The two equity firms will go 50-50 in the venture.
Acxiom stockholders will receive $27.10 in cash for each outstanding share of stock, a 14 percent premium over its Wednesday closing share price of $23.67 and a 21 percent per share premium over Acxiom's average closing price per share during the 30 trading days ended Wednesday.
During a conference call about the deal Wednesday evening, Charles Morgan, Acxiom's CEO, noted that Acxiom's share price hasn't seen $27 in about six years.
Morgan also commented about ValueAct's role in the deal. Acxiom and ValueAct battled during 2005, when ValueAct made repeated offers to buy the company and accused Acxiom executives of poor management. Acxiom finally granted Ubben two seats on its board in 2006.
"At one time we did have mistrust and misunderstanding, but that environment has now been dramatically transformed," Morgan said during the call. "We now have an atmosphere of mutual understanding and ... trust."
At an 8 p.m. news conference following the announcement, Morgan said it is his desire to remain CEO of Acxiom. While regulations prevented him from having discussions about his future at Acxiom while the company finalized the buyout, Morgan said he believes Acxiom's new owners want him to stay. Morgan has been with Acxiom since it was founded in 1969.
Also Wednesday, Acxiom formally announced a new management structure whereby it would arrange itself into three divisions, with a CEO overseeing each: Acxiom Services Division, led by Acxiom Chief Operating Officer Lee Hodges; Acxiom Information Products Division, led by Alex Dietz; and Acxiom Infrastructure Management Division, led by Marty Sunde.
The reorganization, which Arkansas Business reported on April 5, took effect April 1, the company said.
"This change is all about bringing focus and dedicated management to each key area of our business," Morgan said in a news release. "We believe this structure more closely aligns with our overall mission and therefore will lead to greater returns for our shareholders."
Additionally, Acxiom said it hired Chris Wolf to become the company's chief financial officer. Recently, Wolf was a senior advisor at Boulder Specialty Brands and an executive vice president and CFO at Catalina Marketing Corp.
Value to Shareholders
Acxiom said its board of directors had approved the buyout and would recommend its shareholders do the same. The deal is set to close in the next three to four months pending regulatory and approval by at least two-thirds of Acxiom shareholders. But the deal also allows Acxiom to solicit and consider proposals from other companies during the next 60 days, which Acxiom said it intends to do.
At the news conference, Morgan said that while he does not expect a bidding war during the next 60 days, he does expect to see other offers. He noted that Acxiom would have to pay a $22.25 million break fee should Acxiom decide to go with another buyer during those 60 days.
Morgan said Acxiom considered other options besides selling to a private equity group. He said Acxiom could have conducted a partial recapitalization, a share buy-back or sell a piece of the company, among other alternatives.
"We are pleased to reach this agreement because it gives us an opportunity to deliver excellent value to Acxiom's shareholders," Morgan said. "We believe this deal will benefit our clients, our associates and our industry."
Quarterly, Yearly Results
Acxiom also released fourth-quarter and full-year earnings results.
For the quarter, Acxiom reported income from operations of $29.3 million, a 34 percent decrease from $44.6 million during the same quarter last year. Earnings per share fell 69 percent to 8 cents from 26 cents.
Those numbers on came on quarter revenue of $357.3 million, up 4 percent over $344.3 million during the same quarter last year.
For the full year, Acxiom reported revenue of $1.40 billion, up 4.7 percent from $1.33 billion a year ago, an increase of $63 million.
Income from operations reached $158.8 million, up 21.1 percent from $131.1 million in fiscal 2006. Earnings per share were 84 cents, up 18 percent from 71 cents the year before.
In Arkansas, Acxiom has about 3,000 employees at offices in Little Rock and Conway. Worldwide, it has about 7,300. Publicly traded since 1983, it had about $1.3 billion in revenue in fiscal 2006.