Alliance Data Systems Corporation (ADS) has agreed to acquire Aspen Marketing Services. Alliance Data will pay $345 million plus a working capital adjustment as purchase consideration. The acquisition is expected to close in the second quarter, subject to regulatory approvals and closing conditions.

Aspen Marketing Services is the largest privately held marketing services agency in the United States, providing a full range of digital and direct marketing services, and advanced analytics to perform data-driven customer acquisition and retention campaigns.

Alliance Data expects the acquisition to be slightly accretive to core EPS in 2011 and accretive to both GAAP EPS and core EPS subsequently.

Adding Aspen to the portfolio will broaden Epsilon’s agency business through scale, new agency capabilities and technology. The acquisition also complements Alliance Data’s strategy of making strategic acquisitions, augments Epsilon’s core capabilities and strengthen its competitive advantage to gain a dominant market position.

Also, the acquisition will help Epsilon achieve $1 billion in annual revenues and $250 million in Earnings before Interest Tax Depreciation and Amortization in 2012. In the first quarter of 2011, Epsilon recorded the highest revenue growth of 23% and second highest growth in EBITDA.

Alliance Data believes the acquisition will add automotive as a new and well established vertical for Epsilon, add significant depth in telecom, while expanding Epsilon’s footprint in financial services and CPG as well as provide strong potential for cross-selling opportunities for Aspen‘s and Epsilon’s established verticals.

The quantitative Zacks #2 Rank (short-term Buy rating) for Alliance Data indicates upward pressure on the stock over the near term.

Headquartered in Dallas, Texas, Alliance Data Systems Corporation, together with its subsidiaries, provides data-driven and transaction-based marketing and customer loyalty solutions primarily in the United States and Canada. It competes with Discover Financial Services (DFS).

 
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