This time next week, if everything goes smoothly, Direct Media will be part of the InfoUSA empire.
But it could have happened differently, judging by a memo sent Wednesday by DMI’s CEO Larry May announcing the merger to his staff.
May wrote: “During the past year, we were approached by two leading companies with offers to purchase DMI. Our board believed it was our obligation to explore these offers, and others for comparison. Over the coming months, we had discussions with several major firms including some competitors.”
He continued: “By far the most compelling offer came from InfoUSA.”
May added that the deal will enable DMI to expand its data services, develop new products and improve its internal systems. He noted that “the leadership and key staff of DMI will remain in place for years to come.”
InfoUSA has acquired several list companies, including Walter Karl, Edith Roman, Rubin Response, Millard, Mokrynskidirect, American Church Lists and Jami. A few have been absorbed into the other brands, but many survive.
Ed Mallin, president of the InfoUSA Services Group, said he had no knowledge about interest by other potential acquirers. May was unavailable for comment at deadline.
Meanwhile, DMI competitors absorbed the news.
“It’s a great thing for us,” said Lon Mandel, CEO of The Specialists. “It takes away some competition.”
He continued: “Vin (Gupta) has a vision. If businesses aren’t strong and they are acquired, at least they will be around in some form. There will be casualties — there always are — but the margins are getting smaller, and expenses are going up. These transactions are occurring for that reason.”
Mandel wondered if there is internal competition within InfoUSA.
The Specialists has also purchased several companies, but none as large as Direct Media. All the firms it picks up are integrated under the corporate banner and are part of one unit, Mandel said.
Donn Rappaport, CEO of ALC, expressed a similar view.
“It’s a great thing for Dave (Florence),” Rappaport said on Wednesday. “He needed an exit strategy, and this provides him with one.”
He added: “Every time Vin buys another company, he takes another competitor off the field. We’re happy to see it happen.”
The DMI purchase price was not revealed, but outsiders guess that might be in the $20 million to $25 million range. This is based on what InfoUSA paid for some of the other firms and the fact that the list business is not as robust as it was in the 1990s
Acxiom purchased Direct Media in 1996 for $48 million, based on a near-doubling in three years of Acxiom stock issued in payment, sources said. The company was repurchased by its management team in 2000.
Why will a merger work now when it didn’t work for DMI in the ’90s?
“We know their business,” Mallin said on Wednesday. “We work in it on a day-to-day basis. There’s no learning curve.”
And if it doesn’t? One source joked that founder Dave Florence can repurchase it. According to May and Mallin, Florence, a direct marketing icon, will continue to play a role.
