Acxiom intends to sell its marketing solutions division before moving to a potential sale of LiveRamp, because it believes selling them separately will drive more shareholder value, said sources close to the company.
Interest in Acxiom and LiveRamp in particular heated up in March, after Salesforce bought the middleware tech company MuleSoft for $6.5 billion, a price that inflated the value of SaaS middleware companies.
Private equity firms being shopped Acxiom Marketing Solutions (AMS), its legacy data business, are interested in buying Acxiom outright, sources told AdExchanger, because they see the opportunity to crack the company open and sell LiveRamp at a huge gain.
But Acxiom isn’t considering bids for the entire company.
Instead, it’s undergoing two separate strategic reviews, one announced in February to sell AMS and another one for its Connectivity business, aka LiveRamp.
Acxiom’s plan is to sell AMS, then move on to a LiveRamp divestiture, sources with knowledge of the process told AdExchanger.
When asked on the company’s earnings report Thursday whether Acxiom had received any interest in a deal for LiveRamp or the entire company, CEO Scott Howe told investors, “our focus is on AMS and beyond that we simply will not comment.”
There are a number of reasons why selling AMS first could make sense for Acxiom. For one, LiveRamp would be a strong standalone asset, while value or interest in AMS might crater if LiveRamp was offloaded.
Acxiom executives and key shareholders are convinced selling the business in two pieces, first AMS then LiveRamp, could yield huge returns over Acxiom’s current market cap of about $2.2 billion.
LiveRamp’s value as a standalone middleware SaaS business is obscured within Acxiom, said a source, and considered independently would come with a higher multiple.
LiveRamp’s potential acquirers would also be highly strategic marketing clouds like Oracle, Adobe, Salesforce or Nielsen, which often put higher price tags on deals.
BMO Capital Markets raised its price target on Acxiom stock this year because it expects the strategic review process to unlock value, senior analyst Dan Salmon wrote in an investor note.
And even in February this year Salmon said not to rule out a second deal for LiveRamp, considering the scaled value a marketing cloud company could generate from the product.
Anxiety about consumers’ data privacy concerns could also be motivating Acxiom.
Acxiom’s shares dropped by 20% last month when Facebook said it would discontinue third-party advertising data.
And with GDPR on the horizon, LiveRamp’s identity-matching service could also be penalized by the European Commission, making this a good time to sell high on a business it picked up for $300 million four years ago and could go for billions now, one source said.
GDPR is just a start, Howe told investors on Thursday, pointing to a California ballot initiative for stronger consumer privacy and data standards.
Acxiom’s divestiture of AMS and LiveRamp is likely to extend to late 2019 or into 2020, said one person with knowledge of Acxiom’s strategic reviews.
Meggan Powers, Acxiom VP of corporate communications, told AdExchanger the company would not comment on market rumors or speculation.
