American Express Co. and Epsilon Data Management, Inc. have signed an agreement to merge Epsilon Data Management, Inc. into American Express Travel Related Services.
The shares of American Express common stock being issued in the merger are valued at approximately $64 million. The agreement, which has been approved by the boards of both companies, is subject to approval by Epsilon stockholders and certain regulatory filings.Epsilon, a leader in proprietary database marketing, provides software products and direct marketing services which allow clients to identify and target customers, create effective communication programs, and analyze and understand customer response.
The merger was announced Thursday.
Under the terms of the transaction, Epsilon stockholders will receive .655 of one share of American Express common stock for each share of Epsilon common stock they own, subject to adjustment in the event the trading price of American Express common stock for a period prior to the Epsilon stockholder's meeting falls below $28.00 or rises above $31.00. The transaction is expected to close in late summer.
American Express has also signed a voting agreement with certain executive officers of Epsilon who have agreed not to transfer their shares and to vote such shares in favor of the merger. In addition, American Express has entered into an option agreement with Epsilon allowing American Express, upon the satisfaction of certain conditions, to acquire 546,899 shares of Epsilon common stock at $19.49 per share, payable at American Express's option in shares of American Express common stock. Together these agreements account for approximately 34 percent of Epsilon's outstanding common stock upon exercise of the option.
Stephen Cone, senior vice president, direct marketing group, American Express Travel Related Services Company, Inc., said, "For many years, we have been asked by our business partners to provide the kinds of database management services that we utilize internally. Epsilon, with its 20-year track record and broad database marketing experience, will enable us to do just that."
He added, "The services Epsilon provides will be an essential tool for cutting-edge marketing for the 1990s."
"We are excited about this new relationship with American Express, long a leader in the use of the computer for marketing," said Thomas O. Jones, president of Epsilon. "Epsilon's use of state-of-the-art technology combined with innovative direct marketing programs allows our clients to profile each individual customer and to market to them on a one-on-one basis, matching the right message with the right person."
Epsilon will be operated as a part of American Express's Direct Marketing and Travelers Cheque Group, a unit of American Express Travel Related Services Company, Inc. The Direct Marketing and Travelers Cheque Group is headed by Jonathan S. Linen, who said, "I am delighted to welcome Tom Jones into the TRS family. In addition, this acquisition is a great marriage of two leaders in direct marketing, providing the ability for each of us to capitalize on one another's unique strengths."
Epsilon, headquartered in Burlington, Mass., has offices in Dallas, San Francisco and Newport Beach, Calif. The company's software subsidiary, Epsilon Master Software Corp., is based in Indianapolis.
For the fiscal year ended May 31, 1989, Epsilon reported a loss of $1.085 million, or $0.37 per share, on revenues of $51 million. In the three months ended February 28, 1990, the company earned $552,000, or $0.19 per share, on revenues of $13 million.
American Express Company, a diversified travel, financial and information services company founded in 1850, is a world leader in charge cards, Travelers Cheques and travel related activities. It is also a leader in financial planning, securities brokerage, asset management, international banking and information processing and communications services.