Emma Trincal
A week after San Francisco-based ValueAct, a $3.5 billion hedge fund, vowed to nearly double its stake in Acxiom (ACXM Quote - Cramer on ACXM - Stock Picks) if it wins a proxy fight, the market remains unmoved.
After rising by 1% on the day of ValueAct's announcement, shares of the IT management solutions company have since been trading sideways. On Tuesday, the stock fell 2% to $23.04. Wednesday saw it rise 1% to $23.27. Agitating for change at Axicom is nothing new for Jeffrey Ubben, ValueAct's founder. Last year, the hedge fund manager tried twice to buy the company outright, first for $23 a share, then for $25, to no avail. The board rejected both offers. This time, Ubben is trying to control the board through a proxy fight. As bait, Ubben made implementation of a tender offer for 7 million shares contingent upon his hedge fund winning board seats for its three nominees at the Aug. 3 shareholder meeting. That's all three seats, not two or one. The bet is risky, considering that the activist is battling a management that previously refused to let ValueAct have its way and that has previously blocked its participation to the board. "They're making it more difficult for him to make the changes that he wants," says Kevane Wong, an analyst a JMP Securities, who has a market outperform rating on the stock for a $27 price target for fiscal year 2007. His firm has no banking relationship with Acxiom. Still, Ubben sent a strong message to management with last week's offer, disclosed in a 13D filing. The tender offer would give ValueAct just under 20% of Acxiom's shares, a portion large enough to increase its ownership to the maximum percentage without triggering a poison pill. And with three board representatives on the board, Ubben would be in a position to push his plan to sell the company.
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