Client Need Drives Acxiom's $140M Digital Impact Buy

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A growing need for integrated online and offline marketing solutions was the catalyst behind yesterday's announcement that Acxiom will acquire online marketing services provider Digital Impact for $140 million.

"What has been driving our interest in Digital Impact is an amazing amount of interest by our largest customers in the e-marketing arena and everything that Digital Impact is doing along with Acxiom's management capabilities," Acxiom company leader Charles D. Morgan said in an interview with DM News.

Morgan also said Acxiom's existing digital, online and related capabilities would be merged with Digital Impact, which will provide the leadership to the new group and integrated solutions to the clients of both firms.

"We've managed data that is used both online and offline in all of our large solutions and we have operated online solutions for several large clients but they have been custom for that customer," Morgan said.

With postage rates poised to rise another 5 percent to 6 percent next year, the time is right, he added.

From Digital Impact's perspective, the merger benefits its shareholders, employees and clients alike.

"It represents a great offer for our shareholders, and for employees it's a wonderful opportunity to work for a larger and more diversified company, an industry leader," said Kevin Johnson, senior vice president of products and marketing at Digital Impact Inc., San Mateo, CA. "Now we can bring an expanded set of capabilities to our clients and offer it to Acxiom's clients."

Under the agreement, Acxiom, Little Rock, AR, will make an offer for all Digital Impact shares with the acquisition subject to at least 50.1 percent of the shares being tendered. The deal is expected to close within 30 days and was approved by the boards of directors of both companies.

All directors and key officers of Digital Impact will tender their shares, and all other shareholders will be entitled to receive $3.50 per share in cash for shares not purchased in the tender offer.

The deal was announced less than a week after Digital Impact said it was in talks with undisclosed companies about possible mergers in a filing with the Securities and Exchange Commission. Digital Impact had been the target of an unsolicited takeover attempt by infoUSA, Omaha, NE, which had offered $2 per share for the stock it did not already own.

Meanwhile, Digital Impact said it will proceed with a lawsuit alleging that infoUSA-owned Yesmail is infringing on its e-mail technology patent. The lawsuit, filed March 8 in the U.S. District Court Northern District of California San Francisco Division, alleges that Yesmail infringed and continues to infringe on Digital Impact's patent, "Method and System for Remotely Sensing the File Formats Processed by an E-Mail Client."

Yesmail, San Carlos, CA, is part of infoUSA's Donnelley Group. Digital Impact seeks damages to three times the amount adequate and legal fees.

"The lawsuit is totally unrelated to this consummated transaction with Acxiom and the original hostile tender offer by infoUSA," Johnson said. "We take pride in our intellectual property, and we are protecting it."

InfoUSA has not responded publicly to the lawsuit.


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