Epsilon to buy out the marketing Bigfoot
The relationship marketing subsidiary of Alliance Data Systems (ADS), Epsilon, has penned a deal to acquire the New York-based email and marketing automation technology firm Bigfoot Interactive.
Bigfoot Interactive helps clients acquire, grow and retain customer relationships through large-scale, relevant, permission-based email communications. To do this, it receives customer data from its clients and develops well targeted, completely automated e-mail campaigns to suit the client and its customers.
The company's 85 employees provide e-mail communications and marketing automation, and all of them are expected to stay with the company after the takeover. Bigfoot's management team will be used to help develop Epsilon's business, as well the development and expansion of Alliance Data's loyalty and marketing services in North America.
New markets Representing approximately 165 brands and divisions across its client base, Bigfoot has a strong presence in the financial services sector (with clients including JPMorgan Chase & Co., Capital One and Discover Financial Services), and in the retail sector (with clients such as Amazon Services, Target and Expedia).
Currently, the Canadian Air Miles loyalty reward programme makes up the majority of Alliance Data's marketing services operation, with Epsilon serving as the corporation's US-based marketing platform. After the deal is closed, Bigfoot Interactive will change its name to Epsilon Interactive and will serve as Epsilon's key offering in the interactive marketing and communications arena.
Benefits for ADS The benefits Alliance Data expects to realise from the acquisition include:
- A stronger presence for Epsilon in both the financial and retail vertical markets;
- A new capability for Epsilon to provide large-scale targeted email communications and marketing integration, and automation solutions;
- An integrated real-time marketing platform that delivers segmented, customised programmes across multiple channels (direct mail, email and call centres);
- Expanded capabilities for integrated email/direct mail-based customer optimisation services.
The price Total consideration for the transaction is expected to be approximately US$120 million. The acquisition is anticipated to close during autumn 2005. Annual revenues at Bigfoot Interactive are approximately US$30 million. When the deal closes Bigfoot's current CEO, Al DiGuido, will serve as President for Epsilon Interactive.
According to ADS, the deal is expected to be slightly accretive to cash earnings and neutral to GAAP earnings during 2006, with increasing accretion expected thereafter, resulting from anticipated growth of the business and planned de-leveraging from strong cash flow generation.
Mike Iaccarino, president for Epsilon, said: "Bigfoot brings with it a business model that addresses the significant demand for, and the market's rapid growth of, multi-channel marketing services, technologies and database solutions that help marketers optimize customer relationships and marketing ROI."