Conway-based Acxiom Corp. on Monday announced a $2.3 billion cash deal to sell its major business line to Interpublic Group, a global advertising giant based in New York.
The deal, which isn't expected to close until the end of the year, will mark the end to Acxiom's 40-year presence in central Arkansas as a stand-alone company.
The Acxiom brand name will become part of the Interpublic Group portfolio, the company said in its announcement of the deal.
Previously known as CCX Network, the company took the name Acxiom in 1988, partly because investors confused it with CCX Inc., a New York-based tool steel and aluminum and fiberglass screening company.
When the sale closes, what is left of Acxiom will be called LiveRamp and its headquarters will be San Francisco, Scott Howe, chief executive officer for Acxiom, said in a news release.
LiveRamp, which Acxiom acquired in 2014 for $310 million, is a data onboarding company that transfers offline data to online applications for marketing purposes. LiveRamp can move data between most major marketing applications.
Analysts say LiveRamp is a fast-growing profitable business, has a dominant position within the industry and can become more attractive if its value can be unlocked as a stand-alone company.
In separate announcements, both Acxiom and Interpublic Group, or IPG, extolled what it called a "definite agreement" for Acxiom to sell its Acxiom Marketing Solutions business. The sale comes a few months after Acxiom, eager to divest itself of its staid but still lucrative segments, announced a strategic review of the company's assets. The sale of Acxiom Marketing Solutions was among the options.
A news report of an imminent deal sent Acxiom shares up about 14 percent Monday. The deal was announced after the market closed.
Acxiom Marketing Solutions represents about three fourths of Acxiom's annual revenue. It generated $697 million in the the company's 2018 fiscal year.
"This transaction is a great outcome for both Acxiom and our AMS business unit," Howe said in his company's announcement. "Acxiom Marketing Solutions is a strong business with deep expertise in data-driven marketing, talented associates and an exceptional client roster.
"After careful consideration of a variety of options and potential partners, it became clear that a sale of AMS to IPG, with its vast scale and breadth of complementary services, represented the best possible path forward for our clients and associates."
In the announcement, Acxiom said the deal "unlocks immediate value for Acxiom shareholders and enables Acxiom to return capital through an accelerated and expanded ongoing share repurchase program" and gives the company greater financial flexibility to expand or acquire other companies.
The deal also "marks the expansion of an already strong relationship that exists between IPG and LiveRamp," Acxiom said.
"The deal returns significant capital to shareholders, and at the same time, allows us to invest in LiveRamp's industry-leading capabilities, technologies and market opportunities," said Warren Jenson, Acxiom's chief financial officer.
Interpublic Group, a global advertising giant hungry for a data company to help its advertising clients with targeted ads, was one of two global advertising holding companies that The Wall Street Journal reported last week had submitted bids to purchase Acxiom Marketing Solutions.
They and other advertising firms are under pressure to improve their digital marketing because consumer data have become an increasingly important tool in the ad-buying process, the Journal said. The digital marketing element has undercut the advertising firm's long-held strategy to use size and purchasing power to get the best prices for their clients.
Interpublic said the deal combines its media, creative, marketing services and analytics with what it called Acxiom Marketing Solutions' "unrivaled expertise in data management."
"In a world where everything is becoming data-driven, Acxiom Marketing Solutions offers the deepest set of capabilities for helping companies navigate the complexity of creating personalized brand experiences across every consumer touchpoint," said Michael Roth, chairman and chief executive officer of Interpublic Group. "Combining AMS with a range of IPG assets will help us shape the future of our industry."
Acxiom Marketing Solutions includes all of Acxiom's data and data services. The unit has 2,100 employees, 1,600 data specialists; more than 2,000 clients; access to hundreds of marketing databases; recognizes 2.2 billion connected consumers, and manages more than 20 billion customer records.
"Its capabilities allow brand, media and technology partners to improve every customer interaction," Interpublic Group said.
John Battelle, an Acxiom board member, said in testimony before a U.S. Senate committee last month that data are becoming more valuable than currency.
Battelle is an entrepreneur, journalist, professor and author who has founded or co-founded scores of media businesses, including Wired magazine.
He was testifying about Facebook and its dealings with Cambridge Analytica, a third-party data broker that improperly collected personal information on 50 million users of the social media network.
The fallout affected Acxiom after Facebook discontinued its business arm, Facebook Partner Categories, which used data from Acxiom and other firms to target specific audience groups with advertising.
"Given that data is non-rivalrous and services such as Facebook are free of charge, it is often presumed there is no harm to consumers [or by extension, to society] in its use," Battelle told the Senate committee, according to a transcript he posted online. "This also applies to arguments about antitrust enforcement. I think our society will look back on this line of reasoning as deeply flawed once we evolve to an understanding of data as equal to -- or possibly even more valuable than -- monetary currency."
Acxiom shares rose $4.26, or 14.2 percent, to close Monday at $34.21 on the Nasdaq exchange after trading as high as $34.34 earlier in the day. The shares rose another 8 percent in after-hours trading.
Interpublic shares fell 41 cents to close at $23.03 in trading on the New York Stock Exchange.
A Section on 07/03/2018
Print Headline: Acxiom's marketing unit sells for $2.3B