Acxiom Corp. is selling its struggling information-technology infrastructure management operations in a potential $190 million deal with two private-equity firms, the Little Rock-based company said Wednesday.
Acxiom will retain a 5 percent interest in the value of the company after the sale to Charlesbank Capital Partners and M/C Partners is completed.
Through the deal, Acxiom will receive $140 million in cash when the sale closes and up to $50 million in contingent payments subject to certain performance requirements. The company did not explain the requirements.
"In the last three years, we have taken a number of steps to tighten our strategic direction," said Scott Howe, chief executive officer of Acxiom, in a prepared statement. "This transaction represents the next phase in our journey to focus Acxiom on growing its core marketing and data services business, and extending its leadership in onboarding and connectivity."
Onboarding is the process of converting information to a digital format so it can be used for marketing campaigns.
The sale likely will close in 45 to 60 days, pending regulatory approval. The information-technology operations will become a privately owned business when the sale is complete.
The sale of Acxiom's information-technology business shows "a company that is proactively trying to get back to their core roots," said Bob Williams, senior vice president and managing director of Simmons First Investment Group Inc. in Little Rock.
Acxiom's main business is as a data broker, where it uses information it collects from public records, shopping habits and clients to help its customers with targeted marketing campaigns.
A spokesman for Charlesbank Capital said the company did not have further comment beyond what was in the news release. A spokesman for M/C Partners, which has offices in Boston and San Francisco, did not return an email seeking comment.
"We are excited about the opportunity to work with Acxiom and our partner, M/C Partners, to provide the financial and operational resources to facilitate Acxiom IT's growth and continued success," said a prepared statement by Ryan Carroll, managing director at Charlesbank, which has offices in Boston and New York. Charlesbank manages about $3 billion in capital assets.
Shares of Acxiom rose 10 cents to $17.49 on the Nasdaq on Wednesday. The company announced the deal with Charlesbank Capital and M/C Partners after the markets closed.
In addressing how the deal will affect Acxiom's clients and employees, the company said in a statement: "[w]hile there may be a small number of associates who move buildings, by and large, associates will still go to the same place to work."
Acxiom said it still will own and operate the data centers that house data and equipment for clients in its marketing and data services segment.
The sale of Acxiom's information-technology business comes as the company has seen revenue from the segment decline.
During the company's 2015 fiscal year, which ended March 31, Acxiom saw revenue from information-technology operations drop by 20 percent in the first quarter, about 17 percent in the second quarter and 16 percent during the third quarter, compared to the corresponding periods in 2014.
As a result of declining revenue in the information-technology infrastructure segment, Acxiom's total revenue during the third quarter fell 3 percent to $260.4 million.
The majority of Acxiom's revenue comes from its marketing and data services.
Acxiom said it would use money from the sale to pay down debt and toward expanding its stock share repurchasing program. The company has increased its share buyback program by $50 million to $300 million and extended the duration to Dec. 31, 2016.
Acxiom also released its preliminary fourth quarter and fiscal 2015 financial results Wednesday. The company said total revenue from continuing operations was $257 million for the fourth quarter, compared to $269 million during the same period in 2014.
Acxiom will release its full quarterly and fiscal year earnings today after the markets close. A conference call will be held at 4 p.m. today to discuss the results. The call can be accessed on the investor section of the company's website at acxiom.com.
A Section on 05/21/2015