Alliance Data Systems reported yesterday its plans to buy DoubleClick’s Abacus division for $435 million, giving the company a foothold in e-commerce and an extended customer base. Abacus’ 525 employees will be integrated into Alliance's Epsilon unit. The acquisition price of $435 million underscores just how far things have come since the internet bubble burst; DoubleClick paid $1.7 billion for Abacus in 1999 back when it was a publicly traded company whose price rose from $17 to $200 in a matter of a year. According to Alliance Chairman and CEO Mike Parks,The deal will open “cross-selling opportunities across Alliance Data's businesses,” making Abacus “a perfect strategic fit” for his company. Alliance has plans to expand Abacus’ cooperative database to new industries including financial services, pharmaceuticals and travel services companies. The acquisition is expected to $0.05 to Alliance's EPS in 2007 but be neutral in terms of overall GAAP earnings. If it receives the requisite regulatory approval, the deal should close during 1Q'07.
• Sources: Wall Street Journal, Reuters, Red Herring
• Related commentary: Cramer's Take on ADS, Seeking Alpha's M&A Page
• Potentially impacted stocks and ETFs: Alliance Data Systems (ADS). Competitors: Electronic Data Systems Corporation (EDS), Affiliated Computer Services (ACS).
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