Company Acquisition Comes with Huge Data Reserves

Talk of personalized marketing has been a huge thing within the customer loyalty space over the last two or three years. Brands want to move away from traditional forms of advertisement like TV commercials, billboards, magazine spreads, etc., to more personalized forms, like the creation of digital experiences for just one specific customer. The key to such a proposition is data.
This is why a recent agreement between two companies, Alliance Data Systems and Publicis Group, is such a big deal. Alliance has agreed to sell its Epsilon business to Publicis for $4.4 billion. What Publicis gets in exchange is access to a massive amount of customer data, which it can use to create true, one-to-one marketing. The transaction was unanimously approved by Alliance’s board of directors and is expected to close in early Q3 2019, subject to satisfaction of customary closing conditions and receipt of regulatory approvals. 
Net cash proceeds, after tax obligations and fees associated with the transaction, are expected to be $3.5 billion. Alliance Data expects to use the full amount to repurchase shares and pay down corporate debt. On a full-year, run-rate basis, the transaction will be accretive to core EPS guidance of $22 and highly accretive on a GAAP basis. Further details about the transaction will be provided on Alliance Data’s Q1 earnings call scheduled for April 25, 2019.
“I’m pleased to say the announcement represents a trifecta win for Alliance Data, Epsilon, and Publicis Groupe,” says Ed Heffernan, President and CEO of Alliance Data. “The announcement of this transaction represents the culmination of an extensive assessment of strategic options for our Epsilon business. With this transaction, Alliance Data is executing on its previously announced goals of transitioning into a leaner, more focused organization and unlocking additional shareholder value while also finding what we believe to be the right home for Epsilon’s technology, data assets, and associates. We believe that Publicis Groupe will be the ideal cultural and strategic fit for Epsilon and its Conversant business and will help drive Publicis Groupe’s own transformation in today’s data-driven digital world.”
He continues, “Furthermore, the unique relationships that have been cultivated between Epsilon and our other Alliance Data businesses will remain intact, and we look forward to working with Publicis Groupe to develop a broader relationship, and promoting mutual and sustainable growth going forward.”
Arthur Sadoun, Chairman and CEO of Publicis Groupe, adds, “Epsilon is a unique asset with world-class capabilities that many of Publicis Groupe’s clients are clamoring for us to add to our current portfolio. Acquiring Epsilon will allow Publicis to be uniquely positioned to be the preferred partner of our clients in their transformation by delivering personalized experiences to clients at scale. As part of Publicis, we believe Epsilon will be able to take advantage of our breadth and strengths to drive improved growth. We are also excited about growing our relationship with Alliance Data’s other businesses. We look forward to welcoming Bryan and the rest of the Epsilon team to the Publicis Groupe family.”
Again, this is a huge acquisition for Publicis Groupe. If personalization is the future of the customer loyalty industry, then Publicis has taken a giant step in the right direction by acquiring Epsilon’s data. It will be amazing to see what Publicis can do to personalize its media and messages throughout the customer journey, from the customer-acquisition stage to the lifetime-customer stage.

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