Please ensure Javascript is enabled for purposes of website accessibility

Why Acxiom Corporation Stock Popped (Again) Today

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

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

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

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.