Battlelines Drawn for Control of Skiptracing Giant

By CollectionIndustry.com Staff

Acxiom (Nasdaq: ACXM) chairman and founder Charles D. Morgan may soon be out of a job.

ValueAct Capital Master Fund LP, an investment firm with a 12 percent interest in Acxiom, has nominated three of its own — co-Founder Jeffrey Ubben, Michael Lawrie, a ValueAct partner, and Louis Andreozzi – for election to Acxion’s board of directors at the company’s annual meeting later this year. If this power move proves successful, Ubben said, in an interview with MarketWatch, that the fund would look to replace Morgan with a new leader.

Acxiom, a major player in skip tracing technology, has had a reputation in the industry as a solidly performing company. In August of 2005, the company announced its purchase of Colorado-based InsightAmerica. The move allowed for Acxiom to better serve businesses, law enforcement, and government with comprehensive custom data-driven solutions, analytic tools, and background screening services to help their fast-growing need to mitigate risks, prevent identity theft and limit fraud.

"In contrast to ValueAct's criticisms of Acxiom stands the recent performance of the company," Morgan said in a response to ValueAct's letter. "In fiscal 2006, Acxiom realized a 23.5 percent increase in our stock price, an improvement better than the performances of 60 percent of companies listed on the Nasdaq exchange. In addition to the stock price increase, we generated record revenue, earnings and free cash flow in our third fiscal quarter."

Morgan also noted that Acxiom's current board and senior leadership has been integral in assisting the company to meet its financial goals in 50 of the last 55 fiscal quarters.

According to Ubben, however, while the company appears to have a strong position in a fast-growing market, profit margins are hovering around 8 per cent. In comparison, competitors like Choicepoint Inc. and Fair Isaac have margins of more than 20%.

Jeffrey Ubben had made a similar bid for a seat on Acxiom's board in May of 2005. Ubben's desire to take the company private, though, was seen as a conflict of interest, and his bid was turned down.

"While we have not felt it appropriate for Mr. Ubben to be a member of our Board, I have had several conversations with him over the last six months concerning our business strategy and performance," Morgan said. "Mr. Ubben has indicated to me on more than one occasion that he believes the company is headed in the right direction, but ValueAct’s letter shows us that Mr. Ubben and his nominees think they can do a better job of leading Acxiom."

Ubben told MarketWatch, "We're happy to have Charles stay involved in some capacity, but it's a founder-run company and it has all the problems of a founder-run culture. The business has outgrown the founder and it's not taking advantage of opportunities in the marketplace."