Boston, MA 09/12/2014 (wallstreetpr) – Data-driven marketing and loyalty solutions provider, Alliance Data Systems Corporation (NYSE:ADS) Chief Executive Officer Ed Heffernan said that the acquisition of digital marketing services company, Conversant Inc (NASDAQ:CNVR) ‘bulks up’ the company in digital marketing.
Fastest Growth
The company CEO said that the digital market has been witnessing the biggest secular growth, according to its statement. Therefore, he was more impressed by Conversant influence in digital capabilities across Alliance Data Systems Corporation (NYSE:ADS)’s organization. He was confident of the combination generating strong demand for Conversant Inc (NASDAQ:CNVR) ‘s products apart from the possibility of fuelling growth pace with the existing clients at Epsilon, as well as, every Alliance Data business.
Ed Heffernan said that the acquisition was an ideal fit for both the companies since the merged entity would become more balanced and a diversified one. After the completion of the merger, Epsilon/Conversant’s contribution to consolidated revenue would be 35% while LoyaltyOne and Private Label would contribute 25% and 40% respectively.
Acquisition of Conversant
Both the companies have struck a deal whereby Alliance Data Systems Corporation (NYSE:ADS) would buy all Conversant Inc (NASDAQ:CNVR) outstanding shares in exchange of either Alliance Data stock or cash worth about $2.3 billion. In other words, Alliance Data would buy Conversant at $35 a share.
Alliance Data Systems Corporation (NYSE:ADS) would pay about 48% in cash and the rest of 52% in ADS shares. While the exchange ratio has been fixed at 0.07037, the cash portion would be a minimum of $14.98 and a maximum of $18.62 a share representing a float of 10%. The deal, which is subject to approval from the regulators, would be expected to be completed by the year end. Alliance Data Systems Corporation (NYSE:ADS) predicts earnings accretion from the deal to be about 50 cents a share to its core earnings in the first year and 75 cents a share in the second year.
The companies have not indicated any cost synergies or revenue while factoring into earnings accretion estimate. After the closure of the transaction, Conversant Inc (NASDAQ:CNVR) would be part of Epsilon.
Total Market
Both the companies were competing in the $400 billion marketing spend in North America annually. It can be classified into three categories of spend. While $150 billion comes from the traditional or general adverting, another $150 billion generated from traditional direct marketing like catalog, inserts, direct mail, etc. Digital marketing such as display, email, search, mobile, video and social generates $100 billion.
