Acxiom Acknowledges Receipt of ValueAct Capital Letter
06 June 2005 - 10:29PM
Business Wire
Acxiom(R) Corporation (Nasdaq:ACXM) today confirmed that it has
received a letter from ValueAct Capital indicating that ValueAct
Capital is prepared to present an offer to acquire all outstanding
shares of Acxiom common stock it does not already own at a purchase
price of $23.00 per share. The Acxiom Board of Directors has
reviewed the letter and, in the event ValueAct does present such an
offer, will review it in accordance with the Board's fiduciary
obligations. "The Board of Directors and senior leadership strongly
believe in the Company's business and current strategy. We remain
committed, as we always have been, to delivering value and doing
the right thing for our investors, our associates and our clients,"
said Acxiom Company Leader Charles D. Morgan. Accompanying this
press release is a copy of the ValueAct letter. About Acxiom
Corporation Acxiom Corporation integrates data, services and
technology to create and deliver customer and information
management solutions for many of the largest, most respected
companies in the world. The core components of Acxiom innovative
solutions are Customer Data Integration (CDI) technology, data,
database services, IT outsourcing, consulting and analytics, and
privacy leadership. Founded in 1969, Acxiom is headquartered in
Little Rock, Arkansas, with locations throughout the United States
and Europe, and in Australia and China. For more information, visit
www.acxiom.com. -0- *T ValueAct letter: June 3, 2005 VIA E-MAIL AND
FEDERAL EXPRESS Mr. Charles Morgan Chairman and Chief Executive
Officer Acxiom Corporation 1 Information Way Little Rock, AR 72202
Dear Charles: Beginning in the mid-1990's, principals of ValueAct
Capital began following Acxiom Corporation (the "Company"). We
watched the Company for many years before making our first purchase
of Acxiom stock in June of 2003. At that time we were attracted by
the apparent resilience demonstrated by Acxiom in the face of
highly challenging business and market conditions and by the
Company's dramatic improvement in cash generation from fiscal 2001
through fiscal 2003. Although we observed some fundamental
weaknesses in the management of the business, we were impressed by
Acxiom's stated plans to leverage its rich data assets into higher
margin products, to develop a more scaleable service delivery
model, and to operate with increased return-on-investment
discipline. Based on comments by the Company to this effect, and on
our continued due diligence, we increased our investment through
the course of 2003. In December of 2003 we met with you and
advocated a public commitment to a Return on Assets (ROA) goal. An
ROA goal was ultimately communicated to the public in May of 2004
in the Financial Roadmap. The May 2004 Financial Roadmap had a
"long term goal" for ROA of 14-16%. The market's positive response
to the introduction of the Company's Financial Roadmap was
immediate and Acxiom's stock rose to multi-year highs. ValueAct
Capital continued to add to its investment position based on our
belief that Acxiom was strongly committed to the value-creating
strategies underlying the Financial Roadmap. However, we have been
dismayed to see that not only have Acxiom's actions been in
contrast to these stated goals, but that the Board of Directors of
the Company has demonstrated a lack of willingness to acknowledge
obvious management deficiencies and missteps and to take steps to
put the Company on the path to strong financial performance. Acxiom
has not followed through on any of the major commitments it has
made to increase shareholder value. Rather than holding to its
public commitments to achieve meaningful margin expansion and
increase returns-on-investment by driving growth with data products
and by developing more standardized service delivery processes,
Acxiom has instead chosen to drive growth through expansion of the
IT Management segment, which is demonstrably the Company's lowest
return, most capital intensive business. The Company has
essentially abandoned the improved return-on-investment plans
communicated in the May 2004 Financial Roadmap by lowering the
long-term ROA goal from 14-16% to 10-14% (May 12, 2005 Roadmap).
The lower ROA range moves the Company much closer to not earning
its current cost of capital. As you know, we have questioned the
strength of the Company's financial management for some time. These
concerns crystallized when it became apparent that management
miscalculated the benefit of the Claritas and Consodata
acquisitions. The original business reasons for these acquisitions
may have been sound, but the financial analysis, forecasting and
capital allocation processes were flawed. We were further troubled
when the Company decided to exclude sizeable capital lease
additions from the Roadmap definition of "Free Cash Flow". Based on
discussions we had with you, we believed that you agreed with our
view that the Company's financial expertise needed to be upgraded
and strengthened, but we were disappointed and surprised when you
later told us that the current financial management was "just
fine". Based on all of these facts and the performance of Acxiom's
stock price, it is clear that the Company needs fresh and
independent participation at the board level to help challenge
management and bring critical financial acumen. When we began
discussions about my possible addition to the Board, we believed
that the Board recognized that it could benefit from the
involvement of a Board member with extensive financial and public
company board experience. At a minimum we thought that the Company
was now committed to making major changes at the Board level. We
now understand that the Acxiom Board of Directors was only making
changes at the Board level to satisfy a NASDAQ corporate governance
requirement and not to make a serious change that could improve the
effectiveness of the Board. As Acxiom's largest shareholder for
nearly two years, we are no longer willing to sit on the sidelines
as opportunities are lost and equity value is destroyed. The
current regime has proven its inability to generate sustained
equity returns over a ten-year period. Now that the promises of the
last two years have proved to be illusory, it is time for the Board
to put the Company in the hands of someone who recognizes the
opportunity to unlock the Company's potential value and who is
willing to provide appropriate value to shareholders today for such
opportunity. To that end, ValueAct Capital is prepared to present
an offer to acquire 100% of the shares of Acxiom that we do not
already own at a purchase price of $23.00 per share, a 25% premium
to the 20-day average of closing prices for Acxiom common shares.
We would prefer to meet with you, your independent directors or
their advisers, at the earliest possible time to discuss these
matters. Please be aware that ValueAct Capital is required to amend
its current 13D filing to include this letter and intends to do so
on Monday afternoon, June 6th. Sincerely, Jeffery W. Ubben Managing
Partner *T
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