Acxiom’s Arkansas operations sold in $2.3 billion deal

After years of private speculation and months of public disclosure, the next chapter of Acxiom is ready to be written.

Interpublic Group of Cos. (NYSE:IPG), a global marketing and advertising agency, has entered into a definitive agreement to acquire the legacy business of Acxiom Corp. for $2.3 billion on Monday (July 2). The sold division includes Acxiom’s Marketing Solutions, which accounts for nearly three-fourths of the company’s revenue. Acxiom leaders announced in February 2018 that they were exploring strategic options for the division, which has traditionally provided direct mail and data services.

The transaction will be a net $2.0 billion deal after consideration of an acquisition-related benefit of the tax step-up, according to a company statement. The agreement has been approved unanimously by the boards of directors of both companies and is expected to close by the end of this calendar year.

“In a world where everything is becoming data-driven, Acxiom Marketing Solutions offers the deepest set of capabilities for helping companies navigate the complexity of creating personalized brand experiences across every consumer touchpoint,” said Michael Roth, IPG’s Chairman and CEO. “Combining AMS with a range of IPG assets will help us shape the future of our industry. Acxiom’s leadership on data ethics is second to none, its business is solid and growing, and it has long played a foundational role in the marketing ecosystem. The company also boasts 2,100 associates with data and analytics skills that are at a premium in business today. Combined with IPG’s world-class client roster, as well as our talented 50,000-person global workforce across media, advertising and marketing services, and you have an unrivaled offering. Over the last year of working closely with AMS to power our AMP data platform, we’ve seen that our cultures are a great fit, and we’ve also seen that the combination creates value for our clients, as it will for our shareholders.”

“Everyone knows how valuable data is, but for most businesses it remains an under-leveraged asset. There also remains a great deal of uncertainty on how best to combine data with the creation and delivery of marketing messages. Our goal is to solve for those opportunities,” added Philippe Krakowsky, IPG’s Chief Strategy and Talent Officer and Chairman and CEO of IPG Mediabrands. “While marketing and information technology are increasingly converging within client organizations, service providers remain bifurcated. With the skills and capabilities that AMS brings to our portfolio of companies, we can offer clients end-to-end solutions that we believe will change the way in which we work for brands, and accelerate the onset of outcome-driven marketing.”

“This transaction is a great outcome for both Acxiom and our Acxiom Marketing Solutions business unit,” said Acxiom Corp. CEO Scott Howe. “Acxiom Marketing Solutions is a strong business with deep expertise in data-driven marketing, talented associates and a client roster that includes many of the world’s leading companies. After careful consideration of a variety of options and potential partners, it became clear that a sale of AMS to IPG, with its scale and breadth of complementary services, represented the best possible path forward for our clients and associates.”

Dennis Self and Rick Erwin will continue to serve as co-presidents of AMS, which will remain a stand-alone division, aligned with IPG Mediabrands, reporting to Arun Kumar, Chief Data and Marketing Technology Officer, IPG.

OPTIONS AND UNKNOWNS
The immediate fate of Acxiom’s 1,400 Arkansas employees was not fully known. The company has major operations in Little Rock and Conway, the firm’s headquarters. It also has locations in Austin, Texas; Burlington, Mass.; Chapel Hill, N.C.; Independence, Ohio; Redwood City, Calif.; New York, San Francisco, Philadelphia, and Chicago.

Internationally, Acxiom has locations in Australia, China, France, Germany, Japan, Poland and the United Kingdom.

Despite selling the bulwark of its revenue-generating business, Acxiom Corp. will move forward as a publicly-traded company with more than $2 billion in cash and a future built on its digital marketing services and products, such as LiveRamp.

Acxiom says it plans to use proceeds to retire about $230 million in debt and initiate a $500 million cash tender offer for its common stock. Additionally, it will increase its outstanding share repurchase authorization by up to $500 million, and extend the duration of the program to December 31, 2020.

In a release from the company, Acxiom said it will also transfer the Acxiom brand name and associated trademarks to IPG; and rename the remaining company LiveRamp. It intends to begin trading its common stock under the new ticker symbol “RAMP”.

CEO Scott Howe and CFO Warren Jenson will remain in their current roles at the newly renamed LiveRamp, which will be headquartered in San Francisco, California.

Market observers predict that Acxiom, which acquired Live Ramp four years ago, could look to sell the smaller, digital-focused company to a company such as Oracle, Adobe, IBM, Salesforce, or Microsoft, where CEO Scott Howe once worked. It could also use the proceeds from the Interpublic deal to finance growth or new acquisitions. LiveRamp has been the fastest growing division of the company for several quarters.

On Monday, Acxiom shares traded at nearly twice the volume as normal with 1,560,729 shares exchanging hands. The company’s stock closed trading at $34.21 per share after trading at a 52-week high of $34.34 earlier in the day.

Acxiom’s fiscal year closed on March 31, 2018. The company generated $917 million in revenue, up 4% from the previous year. It also posted a $23.48 million profit in FY 2018 versus a $4.11 million profit in the previous year.

Acxiom was founded in Conway as Demographics, Inc. in 1969 by Charles Ward. The company originally produced mailing lists for political and commercial clients. Over time, it developed sophisticated data collection on consumers and grew its client base nationally and internationally.

In 1980, the company changed its name to Conway Communications Exchange, and in 1983 it incorporated and went public as CCX Network, Inc. In 1988, CCX rebranded itself as Acxiom and began trading on the NASDAQ under the ACXM symbol.