Acxiom Corp. announced that it is getting out of the IT services business as the Little Rock technology company continues to streamline its operations to focus on its core marketing and data services business.
At the same time, Acxiom fourth quarter earnings improved year-over-year although it reported net losses of eight cents per share from continuing operations on revenue of $257 million. That compares with losses of 33 cents year share on sales of $269 million in the fourth quarter of fiscal 2014.
Company officials said Boston-based private equity firms Capital Partners (Charlesbank) of Boston and M/C Partners agreed to purchase Acxiom IT for $190 million as part of management’s three-year process to “tighten our strategic direction.”
“This transaction represents the next phase in our journey to focus Acxiom on growing its core Marketing and Data Services business, and extending its leadership in onboarding and connectivity,” Acxiom CEO Scott Howe said.
The sale of the company’s IT business is expected to close in the second quarter of fiscal 2016, company officials said, following the satisfaction of regulatory requirements and other customary closing conditions. Acxiom will report the sale as a component of discontinued operations beginning in the first quarter of fiscal 2016.
Company officials said the Little Rock data marketing giant will use proceeds from the sale to pay down debt and to fund the expansion of its share repurchase program.
Added Howe: “We are excited about the future of Acxiom IT under the new ownership group. Their deep expertise, substantial capital base and commitment to IT outsourcing will give Acxiom IT a strong platform for growth and enhance its ability to deliver innovative solutions to its customers. Charlesbank and M/C Partners are gaining a deeply talented team that I am confident will flourish under their direction.”
In a fact sheet accompanying the announcement of the deal, company officials said Charlesbank and co-investor M/C Partners were selected to purchase Acxiom IT because of their “lengthy track record of successfully working together.”
Since 1991, Charlesbank has invested approximately $3.9 billion in 72 companies, and currently has more than $3 billion in capital under management.
“Over many years, Charlesbank has maintained a consistent focus on the middle market, investing across a broad range of industries. The firm seeks companies that offer competitive advantages, strong senior management partners and excellent growth prospects,” Acxiom said.
M/C Partners was founded in 1986, and invests in emerging, high growth segments of the communications, media and information technology sectors. The firm has invested over $1.5 billion into nearly 100 companies in those sectors.
Acxiom also said various steps will take place over the next few months in preparation for the closing of the deal and the formal transfer of ownership. While the time required to receive regulatory approval can vary, company officials said they expect the transaction to close over the next 45-60 days. After the transaction is closed, the new company will be privately owned by Charlesbank and M/C Partners.
Meanwhile, Acxiom’s full-year financial results largely mirrored fourth quarter earnings. The Little Rock data marketer reported net losses of 12 cents per share, compared to 14 cents a year ago. Yearly revenues were also slightly down to $1.02 billion, compared to $1.06 billion in fiscal 2014.
Under the terms of the deal with Charlesbank, total potential cash consideration is nearly $190 million, comprised of $140 million in cash at closing and up to $50 million in contingent payments subject to certain performance metrics. In addition, Acxiom will receive a 5% profits interest in the go-forward company.
In other financial events, Acxiom’s board of directors has increased its share repurchase authorization by $50 million to $300 million and extended the duration of the share buyback program through Dec. 31, 2016. Since inception of the program in Aug. 2011, the company has repurchased 12.9 million shares, or nearly 16% of the outstanding common stock, for $202 million.
At the close of business Wednesday, Acxiom’s shares (NASDAQ: ACXM) were up 10 cents at $17.49 on the Nasdaq stock exchange. The company’s stock has traded in the range of $16.04 and $23.32 over the past year.