Acxiom to be Acquired for $3.0 billion; Insider Trading Alleged Already

Acxiom Corporation (Nasdaq: ACXM) announced Wednesday evening that it has agreed to be acquired by investment firms Silver Lake and ValueAct Capital. Silver Lake and ValueAct will acquire 100 percent of the outstanding equity interests in the company in an all-cash transaction valued at $3.0 billion, including the assumption of approximately $756 million of debt.

Acxiom, a global information and technology company, offers debt recovery and skip tracing services to the ARM industry through its AcxiomInsight division, a unit created in 2005 with the acquisition of InsightAmerica.

Under the terms of the acquisition agreement announced yesterday, Acxiom stockholders will receive $27.10 in cash for each outstanding share of stock. This represents a premium of approximately 14 percent over the closing share price on May 16, 2007, the last trading day before disclosure of the agreement.

ValueAct has been an investor in Acxiom for years.  Also, Silver Lake bills itself as the “premier investment firm in the technology sector.”

But just a few hours after the announcement was made public, suspicions of potential insider trading surfaced around the deal.  A reporter for Bloomberg filed a report Thursday morning calling attention to Acxiom call options that were traded in the week leading up to the announcement.  The story noted that 1,400 call options in Acxiom were traded on May 10, a figure that represents more than 10 times the daily average of 135 over the past 20 days.  Additionally, more than 1,300 options were traded on Monday, Tuesday, and Wednesday of this week.

A call option is a financial contract between two parties in which the buyer of the option has the right, but not the obligation, to buy an agreed quantity of a particular stock from the seller of the option within a certain time for a certain price.  Call options are most profitable for the buyer when the target stock price is moving up, or expected to move up.

According to Bloomberg, the most actively traded contract in Acxiom Wednesday gave investors the right to buy the stock at $25 by May 19.  The stock has since moved above $27 per share on the news of the announcement, making the options a valuable investment for the buyers.