Acxiom to Buy May & Speh for $600 Million
The deal, announced May 27, comes less than two months after Great Universal Stores won a bidding war with American Business Information to purchase Metromail, Lombard, IL. But unlike that scenario, Acxiom, Conway, AR, will exchange 0.8 shares of common stock for every share of May & Speh, Downers Grove, IL, at close to market value.
"The price agreed on was a very small premium on the way the stock closed [May 26],'' said Carla Cooper, research analyst at Robert W. Baird, Milwaukee. "For Acxiom, it's a good thing. They didn't bid the price up as in the case of Metromail.''
Acxiom closed May 27, down $1 11/16 at $20 1/8 while May & Speh was down $1 3/8 to $15 5/8.
The merger will create a database marketing services company with combined revenues of nearly $700 million and more than 4,000 associates worldwide. It will meld Acxiom's proprietary data products, data integration and delivery with May & Speh's data mining, modeling and other information management services.
"When you look at how Metromail's proprietary data was so valuable, this makes sense," said John Struck, a principal in the private investment firm Wand Partners, New York, and a board member of database marketing rival KnowledgeBase Marketing, Chapel Hill, NC.
Acxiom chairman Charles Morgan and May & Speh chairman and CEO Peter Mason agreed that the merger will leverage the core competencies of each company to create customer solutions with more value than either could have offered separately.
"We're in a consolidating industry and we think in the future, size and scale will count,'' Mason said.
The companies were aware of these synergies from sharing customers like IBM, Sears and Trans Union and from working together for the last six months on information solutions in the automobile industry. The combined entity will be a leader in providing database marketing to the financial services, retail, insurance and utility industries.
While Acxiom was not a bidder for Metromail, Morgan said a merger made sense in this case. In addition to access to proprietary data, the merger provides May & Speh with an international direct marketing presence. Acxiom, in turn, enhances and improves its analytical and consulting abilities and gains a foothold in the Chicago area.
"Our customers want capabilities that require huge investments on a global scale, and you can't do it as a small company,'' Morgan said. "We also can't build everything ourselves so we have got to look for partnerships that bring us technology, content and distribution.''
The merger will enable the companies to pursue new customers through joint sales forces, expand the reach of research and development and build more robust information technology systems.
"At first blush, it appears to be a strong combination,'' Cooper said. "It gives Acxiom access to additional people. With the tight labor market in information technology, that is very important."
The merger agreement has been approved by the board of directors at both companies and is subject to regulatory and shareholder approval. It is expected to be completed in August.