May & Speh Acquires Sigma
Under the terms of the agreement, May & Speh, Downers Grove, IL, will pay $20 million in cash for Sigma's assets. A portion of the amount is contingent on certain operating and revenue objectives being met. Sigma, Rochester, NY, also will acquire May & Speh common stock in the transaction.
According to Michael J. Loeffler, executive vice president of direct marketing service at May & Speh, the company raised more than $100 million in March through debt and equity offerings, and the $20 million used to purchase Sigma came from this pool.
"We went out and told Wall Street that we were specifically looking to combine a company like Sigma as part of our acquisition strategy," he said.
According to Loeffler, Sigma "came in our radar list as part of our overall acquisition strategy. As we investigated, we found a similar strategic vision, similar culture and some capabilities that we felt would round out our ability to offer a complete solution." Loeffler said that both Sigma and May & Speh provide complete database marketing services and emphasize client-focused teams.
The acquisition will combine May & Speh's technology and software development and Sigma's affinity for analytics and its ability to create and execute database marketing programs, he said.
Officials from Acxiom, Conway, AR, declined to comment on the Sigma deal because the company's $625 million stock-swap deal with May & Speh isn't finalized. According to Loeffler, Acxiom is "equally as thrilled as we are." Industry insiders said May & Speh could not have purchased Sigma without Acxiom's approval.
Sigma will allow Acxiom/May & Speh to enter the brokerage, mutual fund and business-to-business industries, in which both companies have little experience.
"For instance, on the banking side, both of our companies are much more focused on credit-card-issuing banks, but neither company has done much in mutual funds or stock brokerages," Loeffler said. "They bring this unique industry experience that we find very valuable."
Jack Spears, director of research firm ABN Amro, Chicago, said the acquisition "gives Acxiom/May & Speh expertise in retail banking and some clients that could be important to the combined company. On a financial basis, it's attractive."
Dennis Alongi, chairman and CEO of Sigma, said, "As part of May & Speh, we can offer a wider array of services from an enhanced platform that will help sustain our aggressive growth record."
For the year ended Dec. 31, Sigma reported a net revenue of $8 million. About 65 percent of its revenues were derived from credit-card, retail-banking, insurance and investment-products businesses. About 35 percent came from consumer services and business-to-business marketing. The company has 84 full-time employees.
May & Speh expects Sigma to grow at the same rate as the combined companies -- 20 percent to 25 percent. May & Speh's fiscal year ended Sept. 30, saw net revenues reach $92.5 million, 61.6 percent from direct marketing services and the rest from outsourcing business. Of the direct marketing revenues, 23 percent was derived from financial and banking and 18 percent from retail.
Sigma will become part of May & Speh's direct marketing services business and will be managed by present management at the company's facilities in Rochester. Because of the Acxiom/May & Speh merger, Acxiom will move 1,000 employees to May & Speh's 200,000-square-foot facility in Downers Grove, set to open in September.