The Axe at Acxiom? ValueAct Capital Sends Letter

Just as customer data integration (CDI) is getting hot, Acxiom Corporation finds itself preparing for a potential takeover.

Just days after releasing encouraging news on the quarterly revenue front ($330.5 million), executives at Acxiom Corporation--a leading provider of consumer demographics and syndicated data services--announced receipt of a daunting letter from investor ValueAct Capital. According to a press release on Acxiom’s site:

“Acxiom® Corporation (Nasdaq: ACXM) today confirmed that it has received a letter from ValueAct Capital, dated October 21, 2005 proposing to acquire all outstanding shares of Acxiom common stock it does not already own at a cash purchase price of $25.00 per share.” ACXM was trading at $20.83 per share at market close on Monday, October 24, making ValueAct’s offer an attractive one to existing shareholders.

Acxiom company leader Charles D. Morgan issued the following statement in response to ValueAct’s missive: “As Acxiom said on Oct. 19 upon announcing our second-quarter earnings results, Acxiom is encouraged by what we have achieved, we are making demonstrable progress, and we are convinced we are making the right long-term decisions for our business. Acxiom senior management strongly disagrees with ValueAct’s analysis of our business, and we believe the results of this last quarter and the continuing progress we are making are evidence that we are moving in the right long-term direction.”

The Oct. 19 reference is to Acxiom’s quarterly earnings report, when Morgan offered an upbeat perspective on the company’s stand: “During our second quarter, we saw 11 percent year-over-year revenue improvement, the expense-reduction initiative we announced in June produced better than expected results, our business in Europe improved, and we signed a number of large, new deals,” he said. “These results give us an encouraging outlook for the third and fourth quarters.”

Encouraging, perhaps; but apparently ValueAct Capital sees things differently. Calls to both Acxiom and ValueAct executives were not immediately returned, but one bone of contention is likely a $13 million charge in this past quarter for restructuring. Also listed in that quarterly earnings report was a line item charge dedicated to ValueAct: $2.2 million in legal, investment banking and other fees associated with representation of the Company related to activities by ValueAct Capital.

“A survey of TDWI members run in May 2005 shows that more than half of them work in companies that integrate so-called third-party data or syndicated data into their data warehouses,” said Philip Russom, TDWI’s senior manager of research and services. “Data acquired from third parties like Acxiom is important, because it tells you things about your customers and partners that you can’t see from internal corporate data. In our recent survey, 11% of TDWI members reported using third-party data from Acxiom, which tied with Experian (11%) and trailed Equifax (19%) and Dun & Bradstreet (24%).”

In that same Oct. 19 announcement, Morgan noted that Acxiom recently completed new contracts with Washington Mutual Inc. (formerly Providian), NDCHealth Corporation, MGM MIRAGE, Yellow Book USA and Reliance Insurance. Acxiom is a leader in the increasingly popular realm of customer data integration (CDI); their AbiliTec CDI software provides an integration layer for customer and other information-management initiatives.

About the Author

Eric Kavanagh is the president of Mobius Media, a strategic communications consultancy. You can contact the author at ek@mobiusmedia.com.