Alliance Data Systems, a worldwide provider of data-driven marketing and loyalty solutions, shelled out $2.3 billion for Conversant, gaining access to the company’s technology and Internet-wide reach.
Alliance Data (ADS) will pay $35 a share in a cash and majority stock transaction, the company said Thursday. That represents a 31% premium over Conversant’s (CNVR) closing price of $26.71 prior to the deal announcement.
After the close, Conversant will operate as part of Epsilon, Alliance Data’s direct marketing arm.
“Importantly, the acquisition “bulks up” Alliance Data in digital marketing, which is experiencing the fastest secular growth,” Ed Heffernan, CEO of Alliance Data, said in a statement. “I believe this combination will boost demand for Conversant’s products and also potentially drive growth rates with existing clients at Epsilon and all other Alliance Data businesses.”
Conversant, formerly known as ValueClick, is an affiliate marketing company, which uses data to personalize advertisements in order to target users based on their previous Internet and mobile searches. It’s technology then connects advertisers with the best online placement that will drive consumer engagement.
With the purchase, Alliance Data becomes an end-to-end marketing services company, allowing the company to claim a larger chunk of the $400 billion spent annually on marketing in North America.
Alliance specializes in traditional marketing services, including mailings, catalogs and inserts, and digital, while Conversant specializes in digital, including social, mobile and online video.
The acquisition is expected to be accretive to earnings immediately, adding about 50 cents to earnings per share in the first year and 75 cents in the second. The profit boost is without factoring in any cost cuts or revenue synergies.