What happened
Shares of Acxiom Corporation (NASDAQ: ACXM) were up 15.3% as of 2 p.m. EDT Tuesday after the database marketing company confirmed it will sell its Acxiom Marketing Solutions (AMS) business to Interpublic Group of Companies (NYSE: IPG) for $2.3 billion in cash.
Continue Reading Below
So what
The formal agreement extends Acxiom’s 14.2% pop on Monday, which was spurred by a Reuters report early in the day that Interpublic was close to a deal to buy the division for around $2.2 billion.
For perspective, just last week Acxiom’s entire market capitalization stood at around $2.3 billion. And one separate report (link may require subscription) from The Wall Street Journal previously suggested that AMS — which contributes around three-fourths to Acxiom’s total sales — would command a price between $1.5 billion and $1.8 billion.
“The successful completion of this transaction represents yet another milestone in the Company’s transformation,” stated Axciom CFO Warren Jenson. “This deal returns significant capital to shareholders, and at the same time, allows us to invest in LiveRamp’s industry-leading capabilities, technology and market opportunities.”
Now what
Advertisement
Acxiom expects the sale to close by the end of 2018, at which time the Acxiom brand name and associated trade marks will be transferred to IPG. Acxiom will also rename itself to “LiveRamp” — a reflection of its focus on the remaining data onboarding business unit — and will trade under the new ticker symbol “RAMP.”
The company will also repay its entire $230 million debt balance, initiate a $500 million cash tender offer for its common stock, and increase its current share-repurchase authorization by up to $500 million.
In the end, between the significantly higher-than-expected sale price of AMS, boosted capital return initiatives, and the company’s new focus on its faster-growing subsidiary, it’s hardly surprising to see Acxiom stock soaring again today.
10 stocks we like better than AcxiomWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Acxiom wasn’t one of them! That’s right — they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 4, 2018
Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
