ValueAct Capital, Acxiom Corp.’s largest shareholder, has sent company leader Charles Morgan a letter threatening a potential hostile stock acquisition. The letter questioned Acxiom’s leadership’s financial acumen, a characterization Morgan rejected in a memo to company employees. ValueAct had not tendered an actual offer as of Monday.
As of late March, ValueAct held nearly 11% of Acxiom’s outstanding shares. Assuming ValueAct has not increased its stake since then, at $23 per share the purchase price for the remaining stock would be at least $1.76 billion.
But it may be higher than that. In an internal memo, Morgan told employees that “To prevent abusive takeover tactics, Acxiom’s board long ago implemented a number of defensive measures, including a shareholder rights plan, commonly referred to as a ‘poison pill,’ and staggered terms for board members, so that only a few directors come up for re-election each year.”
Morgan’s memo did not detail the nature of the company’s poison pill. Typically, these provisions require company officials to sell their stock at a price considerably higher than the per-share average during the weeks before a hostile takeover.
Morgan also noted that “ValueAct’s letter does not mean we have received an offer to acquire Acxiom. The letter says only that ValueAct is ‘prepared’ to make an offer to acquire Acxiom. ValueAct has not made an actual offer to acquire Acxiom, nor has anyone else.”
Acxiom released a letter it said ValueAct managing partner Jeffrey W. Ubben sent to Morgan last Friday. In the letter, Ubben said that his company had initially been attracted to Acxiom’s stated goal of leveraging its data assets into higher-margin products. Ubben also noted that, according to Acxiom’s May 2004 financial outlook, the company’s long-term return on assets goal (ROA) was 14-16%.
According to the letter, 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.” Furthermore, Acxiom lowered its long-term ROA goal to 10-14%.
Ubben further said, “
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