Acxiom Rejects Suitor, Releases Earnings

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Acxiom Corp.'s board of directors opted not to enter negotiations with an investment firm intent on taking it over, the Little Rock, AR, company said this week. Acxiom also reported earnings in line with figures recently revised below previous expectations.


ValueAct Capital Partners LP offered $23 per share July 13 for all outstanding shares of Acxiom common stock in an unsolicited takeover bid valuing the company at $1.97 billion.


The offer was detailed in a filing with the Securities and Exchange Commission and a letter to Acxiom's board of directors. Acxiom acknowledged receipt of the letter July 13, saying only that the board would review it "in accordance with its fiduciary obligations."


Acxiom issued a July 20 letter from company leader Charles D. Morgan to ValueAct Capital, San Francisco, stating that the board had rejected the offer. It also said, "We share your belief that the company has a bright future ahead and that there is considerable value in our business above and beyond your proposal."


ValueAct first stated its intent to the Acxiom board in a letter dated June 3 in which managing partner Jeffery W. Ubben criticized Acxiom's financial management and board of directors for failing to increase shareholder value. ValueAct owns 10 percent of Acxiom's stock.


On June 6, Acxiom said publicly only that it received the letter, that its board would review any offer and that its leadership believed in its current business strategy. However, an internal memo from Morgan dated June 6 said that in his opinion, $23 per share did not reflect the company's value and that he vowed to fight any hostile takeover bid.


One day before receiving ValueAct's second letter, Acxiom said that revenue and earnings for its first-quarter fiscal 2006 ended June 30 would not meet expectations and that it had begun cost reductions including job cuts totaling 4 percent of its payroll expenses.


Its July 20 earnings report confirmed its revised first-quarter fiscal 2006 numbers, with revenue of $310.3 million versus analyst estimates of $324.8 million. Earnings per share exceeded revised estimates by 1 cent at 7 cents as opposed to the 16 cents originally expected.


Despite the revisions, revenue was up 7 percent over Q1 2005, when it was $289 million. However, earnings per share were down 50 percent from the previous year when they were 14 cents.


Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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