Alliance Data's Epsilon to Acquire Abacus
Thursday, 28 December 2006
Alliance Data Systems Corporation, provider of transaction services, credit services and marketing services, has announced that its Epsilon unit has agreed to acquire Abacus, a division of DoubleClick Inc. Abacus is a provider of data, data management, and analytical services for the retail and catalog industry, as well as other sectors. The acquisition is expected to close in the first quarter of 2007, following regulatory approval.
Alliance Data expects the acquisition to be a minimum of $0.05 accretive to cash EPS in 2007 and neutral to GAAP earnings. Accretion will accelerate thereafter due to both growth in the business and the de-leveraging of acquisition debt. Total consideration is expected to be approximately $435 million in cash, representing a multiple roughly equal to Alliance Data's current multiple of EBITDA.
Abacus' current EBITDA margins are in excess of Alliance Data's overall margins. Abacus' approximately 525 employees, including senior management, will be integrated into Epsilon and its services will continue to carry the Abacus name under the Epsilon brand. Formal Alliance Data guidance will be more precisely updated and upgraded on its fourth-quarter earnings call (scheduled for Jan. 31, 2007) as visibility into the regulatory approval process and, hence, the closing date, becomes clearer.
The acquisition further cements Alliance Data's confidence in continuing its strong track record of meeting or exceeding its model of top-line growth in the low teens, EBITDA growth in the mid teens, and cash EPS growth in the high teens. Additionally, plans for 2007 include double-digit organic growth, even in the face of very high 2006 comparisons in private label services.