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Why Acxiom Corporation Stock Popped (Again) Today

By Steve Symington - Jul 3, 2018 at 2:47PM

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The database marketing specialist sold its largest business segment at a healthy premium. Here's what investors need to know.

What happened

Shares of Acxiom Corporation (RAMP -3.74%) 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 (IPG 0.07%) for $2.3 billion in cash. 

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.

Man in suit pointing to line and bar chart indicating gains

Image source: Getty Images.

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

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.

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Stocks Mentioned

LiveRamp Holdings, Inc. Stock Quote
LiveRamp Holdings, Inc.
$29.37 (-3.74%) $-1.14
The Interpublic Group of Companies, Inc. Stock Quote
The Interpublic Group of Companies, Inc.
$28.00 (0.07%) $0.02

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