Acxiom announced on Wednesday that it had agreed to acquire ad-tech startup LiveRamp, a company that helps marketers use their offline CRM and transactional data on the web. The deal will cost $310 million and is expected to close mid-summer.
When LiveRamp started in 2012, it had 116 clients. This figure quickly rose to 223 in 2013, where the company experienced 92 percent growth and an increase in revenue by 143 percent.
However, today shares of Acxiom plummeted by 21 percent, translating to a net loss of $0.38 per diluted share. According to Dan Salmon, an analyst at BMO Capital Markets, investors are sceptical about the deal between the two companies because they do not understand LiveRamp’s business, or how it will help Acxiom. “Most investors aren’t very familiar with this company and they paid a lot for it, and it was very dilutive to earnings,” said Salmon.
Moreover, investors have noted that the deal looked expensive. Given that the Acxiom executives are expecting $25 million to $30 million in revenue from LiveRamp in the fiscal year ending March 2016, the $310 million acquisition has caused skepticism over Acxiom’s purchase.
As Elizabeth Dwoskin commented on the Wall Street Journal, Acxiom shares are down 42 percent this year – including Thursday’s sell-off – and investors are concerned about whether the company “can navigate a transition from storing data to serve direct mail and email marketing, to a player in the faster-growing digital-advertising world.”
Acxiom declined to comment on the news.
(Image Credit: Andreas Poike)
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