by David Shabelman
[Posted on October 29, 2007 - 5:44 PM]
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DiggAcxiom Corp. on Monday made a small peace offering to investors when the data services firm said it would repurchase $75 million of its stock. Despite the move, the company's shares remain at roughly half the price Acxiom would have received under a proposed $3 billion buyout that collapsed last month.
Private equity firm Silver Lake and hedge fund ValueAct Capital Partners LP on Oct. 1 withdrew their offer to buy Little Rock, Ark.-based Acxiom for $27.10 per share, one of a number of big acquisitions that foundered amid the credit crisis. The buyers paid Acxiom a breakup fee of only $65 million, with critics slamming the company for not having negotiated stricter terms for the deal, which was announced in May, to ensure its completion. On Monday afternoon Acxiom shares closed up 3%, to $13.40.
Troy Mastin, an analyst with William Blair & Co. LLC, said that Acxiom's falling valuation is likely to deter the company from seeking another deal in the near term. "The board agreed to sell at $27 a share, and I'm sure there's some desire to sell around there, but I don't expect they'd want to sell the company anywhere near the levels it's trading at now," he said.
With the credit markets still in turmoil, any interest in the company would most likely come from a strategic buyer. Among the companies that could be interested in Acxiom are Accenture Ltd. of Hamilton, Bermuda, Choicepoint Inc. of Alpharetta, Ga., Dun & Bradstreet Corp. of Short Hills, N.J., Experian Americas of Costa Mesa, Calif., Fair Issac Corp. of Minneapolis, IBM Corp. of Armonk, N.Y., Interpublic Group of Cos. of New York, Omnicom Group Inc. of New York and TransUnion LLC of Chicago.
Acxiom's openness to a deal hinges on whom the company hires as its CEO. In announcing that its deal with Silver Lake and ValueAct had fallen through, the company also said chief executive Charles Morgan would step down once a successor was chosen. Morgan has led the company since 1975.
During an Oct. 24 conference call to discuss its fiscal second-quarter earnings, the company said it has identified several qualified candidates. Mastin speculated in a research note that a new CEO could be named in early 2008.
Acxiom's earnings have dipped. For the second quarter the company reported net income of $10.5 million on revenue of $351 million, compared with income of $21.7 million on revenue of $348.3 million for the year-ago period. The results for the first six months of Acxiom's fiscal 2008 include $17.4 million in costs related to the aborted deal.
Acxiom and ValueAct Capital did not return calls seeking comment. The San Francisco hedge fund remains Acxiom's largest shareholder, with a 12.8% stake and a seat on the company's board of directors.
Meanwhile, investors that had championed the buyout have exited Acxiom shares. MMI Investments LP, a New York hedge fund that initially opposed the deal but reversed course to support it when the transaction showed signs of collapsing, recently sold 7.6 million shares, leaving it with less than a 1% stake in Acxiom.
