M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, May 18, 2007

Acxiom and the Coming Convergence of Private Equity and Hedge Funds

Acxiom Corp., the database company, yesterday announced an agreement to be acquired by Silver Lake Partners and ValueAct Capital Partners in a transaction valued at $3 billion.  Acxiom stockholders will receive $27.10 in cash for each outstanding share of stock.  Acxiom shares closed yesterday at $27.95 which means that the Street is predicting another higher bid to emerge.

The merger agreement hasn't been filed yet, but Acxiom disclosed in a conference call that it contains a 60-day "go-shop", 1% equity value break-up fee during the go-shop period which rises to 3% thereafter, and no financing condition.  Interestingly, the transaction will require a 2/3rd majority vote of Acxiom's shareholders to win approval.  ValueAct owns 13% of Acxiom according to Bloomberg calculations, and has agreed to vote its shares in favor of the transaction if the Acxiom special committee agrees to a superior proposal. 

I'll save the speech that I have given before (see here and here) about the illusory nature of "go-shops" and simply note that Acxiom disclosed on its conference call that it permitted only one other bidder to conduct due diligence prior to agreeing to this transaction, and only then because Acxiom was approached.   

Finally, ValueAct, a hedge fund, waged a proxy fight against Acxiom last summer, winning a board seat and illustrating the growing influence of hedge funds as activist investors.  Its partnership now with Silver Lake to initiate a buy-out is a marker of another growing trend.  It is yet one more hedge fund entering the private equity business in search of extraordinary returns.  Hedge funds have been criticized for lacking the expertise to play the private equity game, so the Silver Lake partnership is likely to offer ValueAct some assistance on that front.  And so it goes . . . .


Private Equity, Takeovers | Permalink

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