Acxiom board again rejects takeover bid
Posted on Wednesday, December 21, 2005
URL: http://www.nwanews.com/adg/Business/140272/
Promising investors that better days — and a major product announcement — are ahead, Acxiom’s board of directors unanimously rejected a $ 2 billion acquisition bid by ValueAct Capital Partners. And neither ValueAct nor Acxiom showed any signs of backing down in their six-month hostile-takeover fight.
“We are expecting to exceed f inancial estimates for this quarter and for the rest of the year,” Acxiom Chief Executive Charles Morgan said in an interview Tuesday.
Little Rockbased Acxiom collects, manages and sells consumer data. It employs about 2, 600 in Arkansas and nearly 6, 000 worldwide.
A company statement released Tuesday also hinted at bigger things to come : a partnership to market grid computing with a “major technology company.”
Acxiom has said since 2003 that grid computing — a means of linking many small processors to create a system that is smaller, faster and more powerful than traditional supercomputers — would be key to future growth. Although Acxiom has seen some successes, it has also struggled with the cost of upgrading its systems.
“We’ve been criticized... for tremendous [research and development ] expenses that we’ve had,” he said. “I’m suggesting now that we will make announcements that will validate that one of the smartest things we ever did was to make technology investments.”
An announcement of that deal will come by March, Morgan said.
Morgan’s portrayal of a company that has turned the corner contrasts with the image of a sinking ship that ValueAct, a San Francisco investment firm and Acxiom’s largest shareholder, has attempted to create with a steady stream of attacks since June.
ValueAct’s Oct. 24 offer of $ 25 per share for the 88 percent of Acxiom stock it did not already own was the investment firm’s second offer since sending the board a June 3 letter claiming the company had been mismanaged into two consecutive disappointing quarters.
“We are disappointed, but not surprised, that the Acxiom Board has rejected our all-cash, premium offer,” ValueAct said in a statement.
On the day ValueAct made its second offer, Morgan said in a statement that “senior management strongly disagrees with ValueAct’s analysis of our business.”
The rejection came as no surprise to Wall Street, either. Acxiom stock closed up 14 cents to $ 22. 78 in lighter-than-average trading.
Acxiom’s nine-member board met five times over two months to consider the offer, the company said in its news release Tuesday, compared with the eight days it took to reject ValueAct’s July 12 bid of $ 23 per share.
“There was a general feeling by the board, shared by the management, that we ought to do a complete review,” Morgan said. “[We wanted ] to look in great detail of what ValueAct had to say, as well as our own leadership.”
On Nov. 22, the board sat down in Little Rock with ValueAct representatives for their first meeting since the June 3 letter.
Morgan — who said he was not present, at ValueAct’s request — said the meeting lasted several hours, and he described it as a “complete airing of their... reasons that they believe it was the right thing for shareholders to follow their plan.”
But ValueAct described Acxiom’s description of the meeting as “misleading” and again accused the company of failing to properly consider its offer.
ValueAct’s request “was denied an audience with only the independent directors,” the firm said in its statement. “The Board has repeatedly refused to establish a special committee of independent directors to consider ValueAct’s offer.”
Acxiom has five independent board members, who under Securities and Exchange Commission guidelines have no significant financial or personal ties to the company or its leadership.
A lawsuit brought by a shareholder in Pulaski County Circuit Court in June accuses the board of rejecting a legitimate takeover bid out of personal loyalty to Morgan. Acxiom has asked that the suit be dismissed.
In making the enhanced bid in October, ValueAct managing partner Jeff Ubben said he could further increase his firm’s offer after meeting with Acxiom’s board.
But Morgan said he had not heard from ValueAct about a new offer. Ubben did not return requests for comment Tuesday.
ValueAct must have the board’s consent to acquire Acxiom, as a “poison pill” provision will kick in if the firm acquires more than 20 percent of company stock.
In that situation, every shareholder except for ValueAct would be able to buy shares at a below-market rate, nearly doubling the takeover price of the company.
ValueAct has said it will nominate three former data industry executives in a bid to replace Morgan, Ann Die Hasselmo and William Henderson, the three board members up for re-election by shareholders in August 2006.
“There is a complete lack of financial sophistication both at the company and at the board,” Ubben said in a July interview. “They are not good at making money.”
To succeed, ValueAct would need to win over a majority of institutional shareholders — the investment houses and mutual funds that control more than 75 percent of Acxiom stock.
Morgan said he isn’t worried about a board election.
“We believe we’ve got the best plan, and are going to create the most long-term shareholder value,” he said. “And if we sell that idea, then I bet we win.”