Alliance data to acquire ad tech leader conversant for approximately $2.3 billion

September 11th

Dallas, TX, and Westlake Village, Calif.,  September 11th 2014 –  Alliance Data Systems Corporation (NYSE: ADS), a leading global provider of data-driven marketing and loyalty solutions, and Conversant, Inc. (NASDAQ: CNVR), a leading digital marketing company, today announced the execution of a definitive agreement whereby Alliance Data will purchase Conversant. Under the terms of the agreement, Alliance Data will acquire all outstanding shares of Conversant for a combination of cash and stock valued at approximately $2.3 billion, or $35 per Conversant share. The purchase price, structured to be paid with approximately 48 percent cash and 52 percent ADS shares, represents 10x Conversant’s expected forward adjusted EBITDA of $230 million for 2015. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close by year end. The transaction has been unanimously approved by the boards of directors of the two companies.

Alliance Data expects substantial accretion from the transaction: approximately $0.50 and $0.75 to core EPS in year 1 and year 2, respectively, excluding transaction costs. Importantly, no revenue or cost synergies have been factored into the accretion estimates. Post-closing, Conversant will operate as part of Epsilon.

Strategic Rationale: The acquisition of Conversant establishes a truly unique end-to-end marketing services company that will empower clients to more effectively market to their customers across all channels. Across all Alliance Data segments (Epsilon, LoyaltyOne and Private Label), the model is the same:

  • Data: comprised of first-party and third-party, online and offline, transactional to demographic/psychographic, and structured and unstructured.
  • Analytics: use of the data to gain insights into our clients’ customers.
  • Marketing/Creative: create personalized messages for these customers aimed at engendering loyalty and driving sales.
  • Omni-channel distribution: deliver these messages through a distribution system ranging from direct mail, point of sale, email, mobile, social and targeted display.
  • Measurement: the ability to capture the data from the disparate channels and measure the effectiveness, or return on investment (ROI), of the marketing campaign.

The acquisition of Conversant is highly complementary to this focus. It provides not only enhanced online, anonymous and unstructured data, but also cross-device (desktop, tablet, mobile) and cross-channel technology through Conversant’s Common ID initiative. Most importantly, the combination of the two companies provides scale in the rapidly growing display, mobile, video, and social digital channels, and adds important capabilities to Epsilon’s digital messaging platform, Agility Harmony™.  Agility Harmony is a sophisticated, cloud-based, micro-segmentation system designed to bridge all digital channels seamlessly. It captures information across these channels, and can measure the effectiveness, or the ROI, of the marketing campaign. The addition of Conversant’s Common ID, plus the ability to insource all digital capabilities, makes Agility Harmony a first mover with this capability.

Conversant’s data is also expected to enrich Epsilon’s existing offline and online data set, allowing for more effective targeted marketing programs. The ability to use this enhanced data across an expanded distribution network is powerful, and will provide a high value-add, differentiated product offering. Within targeted display, the combined company will be viewed as an agnostic niche player, rather than as a potential competitor as some of the industry giants are now viewed. The reason is trust. For years, clients have turned to Epsilon to help manage their treasured first-party data, secure in the knowledge that the data will be used exclusively for the client’s benefit.