Acxiom buyout deal falls through

Shares in Acxiom Corp. plunged Monday after the data company announced the termination of a $2.25 billion buyout plan that would have taken it private.

The company, which in May agreed to a buyout by Silver Lake Partners and Value Act Capital, said the private equity funds would pay $65 million in cash to terminate the agreement amid an increasingly tight credit market.

Acxiom shares plunged nearly 20 percent, or $3.90, to $15.89 in trading on Monday.

Neither ValueAct, which is also Acxiom's largest shareholder, nor Acxiom would give a reason for the termination or respond to requests by The Associated Press for comment.

Acxiom Chairman and Chief Executive Charles Morgan said in a statement the company will continue to operate as a publicly traded firm.

"While I am disappointed that we could not conclude the (buyout), we have renewed energy and remain focused and committed to delivering value for our shareholders and clients," he said in the news release.

Morgan, who has led the company for 35 years, also announced he would retire once a successor has been found.

"I had been considering stepping down as the leader of Acxiom and thought the completion of our going-private transaction would be the natural time to begin an orderly transition. As Acxiom will now remain public, it is the right time for a change," he said.

Acxiom Corp. specializes in data integration services, data warehousing, and decision support services.

ValueAct and Silver Lake had offered $27.10 per share for Acxiom. Shares have traded well below that number as the months passed without progress on the deal.

ValueAct has a 13.2 percent stake in Acxiom. The fund's managing partner, Jeffrey Ubben, had led an earlier takeover bid that failed. Ubben complained that Acxiom was not maximizing shareholder value.

He was later given a seat on the Acxiom board and the buyout proposal with ValueAct and Silver Lake followed.

Also Monday, Morgan said the company expects to have improved revenue in its second quarter, ended Sept. 30, compared with its first quarter.

In a research note, analyst Frederick Searby of JPMorgan Securities Inc. said Monday's announcement wasn't unexpected, considering conditions in credit markets amid subprime mortgage defaults. He downgraded Acxiom to neutral from overweight.

The research note says that Acxiom could still become a candidate for acquisition. But Searby said that Acxiom faces possible exposure as it works to integrate two European acquisitions and meet margin improvements the company projected. The note also says Acxiom faces the prospect of revenue trouble if the economy deteriorates and customers delay or cancel projects.

"Given that 20 percent of (Acxiom's) revenue has a variable component, shortfalls ... could be in order," Searby says in the note.

In its first quarter, Acxiom had revenue of $338.2 million and a net loss of $11.5 million. The company said expenses associated with the proposed acquisition cost Acxiom $15.1 million, and the company had another $5.5 million expense from the write-off of some longtime assets.

Morgan said the second half of the year will be better than the first.

"Our forecast for the second half of the fiscal year is for improved results compared to the first half of the year. Also, I should note that the $65 million we expect to receive related to the termination of the merger agreement will be substantially more than any one-time expenses related to the merger agreement."

"Acxiom is a leader in database marketing services and data products. Our technology, solid financial position, strong client relationships and dedicated associates will ensure that we remain the market leader," Morgan said.