Alliance Data (ADS) to Acquire Hyper Marketing in $480M Deal
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Alliance Data Systems Corporation (NYSE: ADS) announced that it has reached an agreement to acquire the Hyper Marketing ("HMI") group of companies, the largest privately held marketing services agency in the United States.
The $400 billion annual marketing spend in North America continues its secular shift away from traditional general advertising and toward measurable, ROI-based targeted marketing. It is estimated that this latter market is now 50 percent of the total market and growing at a consistent mid to high-single-digit pace annually.
The ability to successfully navigate and leverage the benefits of this vast and growing market requires a new breed of agency that focuses on building customer connections. This agency model drives business performance through dynamic engagement and meaningful customer experience, and requires a number of critical capabilities. Epsilon is currently the only end-to-end solution offering the "critical five" capabilities that provide the optimal suite of solutions to capitalize on this secular shift, with a focus on meeting the changing set of needs at the CMO level:
* Strategy/creative – working with the C-Suite to conceptualize, develop and execute comprehensive brand marketing strategies focused on customer acquisition, retention and brand loyalty
* Data – providing clients with unique, proprietary insights into their customers' behaviors and channel preferences through transactional, demographic and psychographic data
* Database – processing significant amounts of consumer data and populating sophisticated loyalty and acquisition marketing platforms to enable dynamic marketing initiatives
* Analytics – using advanced analytic techniques to discern and optimize customer behavior
* Distribution – optimizing consumer targeting by leveraging all communications channels, including permission-based email, targeted display, mobile, social, direct mail and point-of-sale
n 2013, HMI is expected to generate approximately $300 million in revenues and $50 million in EBITDA. It has demonstrated a strong track record of organic growth, averaging in the high-single digits during the past few years. This organic growth rate is expected to continue going forward, equating to approximately 3 times expected GDP growth trends. Total consideration to be paid for HMI and existing obligations will be approximately $460 million, subject to working capital and other adjustments, or a multiple slightly over 9 times EBITDA. The transaction is expected to be accretive to both GAAP and Core EPS in 2013, and 2013 guidance will be updated accordingly when Alliance Data releases its 2012 full year results. Closing is expected before year-end, subject to customary closing conditions and regulatory approval.
BofA Merrill Lynch acted as financial advisor to HMI on the transaction.
The $400 billion annual marketing spend in North America continues its secular shift away from traditional general advertising and toward measurable, ROI-based targeted marketing. It is estimated that this latter market is now 50 percent of the total market and growing at a consistent mid to high-single-digit pace annually.
The ability to successfully navigate and leverage the benefits of this vast and growing market requires a new breed of agency that focuses on building customer connections. This agency model drives business performance through dynamic engagement and meaningful customer experience, and requires a number of critical capabilities. Epsilon is currently the only end-to-end solution offering the "critical five" capabilities that provide the optimal suite of solutions to capitalize on this secular shift, with a focus on meeting the changing set of needs at the CMO level:
* Strategy/creative – working with the C-Suite to conceptualize, develop and execute comprehensive brand marketing strategies focused on customer acquisition, retention and brand loyalty
* Data – providing clients with unique, proprietary insights into their customers' behaviors and channel preferences through transactional, demographic and psychographic data
* Database – processing significant amounts of consumer data and populating sophisticated loyalty and acquisition marketing platforms to enable dynamic marketing initiatives
* Analytics – using advanced analytic techniques to discern and optimize customer behavior
* Distribution – optimizing consumer targeting by leveraging all communications channels, including permission-based email, targeted display, mobile, social, direct mail and point-of-sale
n 2013, HMI is expected to generate approximately $300 million in revenues and $50 million in EBITDA. It has demonstrated a strong track record of organic growth, averaging in the high-single digits during the past few years. This organic growth rate is expected to continue going forward, equating to approximately 3 times expected GDP growth trends. Total consideration to be paid for HMI and existing obligations will be approximately $460 million, subject to working capital and other adjustments, or a multiple slightly over 9 times EBITDA. The transaction is expected to be accretive to both GAAP and Core EPS in 2013, and 2013 guidance will be updated accordingly when Alliance Data releases its 2012 full year results. Closing is expected before year-end, subject to customary closing conditions and regulatory approval.
BofA Merrill Lynch acted as financial advisor to HMI on the transaction.
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