ADS Weighs Sale of Epsilon Marketing Business

From the Wall Street Journal:

Alliance Data Systems (ADS) is exploring a potential sale of its Epsilon marketing-services business, the company said Tuesday.

The company said it will review strategic alternatives for the business, which generated revenue of $2.2 billion in the year ended Sept. 30, though there is no guarantee a transaction will occur. Alliance Data said that it will make disclosures as appropriate and that its board will make a final decision on any specific action.

The move was the result of an internal review of operations, Alliance Data said. The company said that if it divested the business it would use proceeds to reduce debt and return capital to shareholders through stock buybacks or dividends.

Analysts had viewed a sale of the Epsilon business as a possible result of the review. Susquehanna Financial Group analysts said in a note last month that Acxiom Corp.’s ]deal in July to sell its marketing-solutions business to Interpublic Group of Cos. for $2.3 billion likely “opened the eyes” of Alliance Data management to prospects for Epsilon.

The Epsilon business this year has been hurt by weaker-than-expected revenue from its agency services and site-based displays in addition to client bankruptcies, Alliance Data executives told analysts on an earnings conference call in October. Last year Epsilon accounted for roughly 30% of Alliance Data’s total revenue.

Alliance Data bought Epsilon in 2004 to help it expand into different industry sectors in providing loyalty-marketing services and bolster its private-label credit-card business. Epsilon in 2014 bought Conversant for $2.3 billion in cash and stock in a bid to bolster its digital-marketing capabilities.

Epsilon employs over 8,000 people in 70 offices world-wide, according to Alliance Data. Plano, Texas-based Alliance Data has about 20,000 employees across its businesses.

Shares in Alliance Data, which have fallen 9.3% over the past 12 months, rose 0.5% to $202 in low-volume premarket trading.

Posted by on November 27th, 2018 at 9:41 am


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