• by Gavin O'Malley  @mp_gavin, June 2, 2010

Epsilon parent Alliance Data Systems on Wednesday said it reached a definitive agreement to acquire the direct marketing services division of Equifax for $117 million.

Equifax's DMS division provides proprietary marketing solutions through two offerings: database marketing and hosting, and data services including U.S. consumer demographic information.

Alliance Data Systems said the purchase price will have no impact on earnings for the remainder of the year, but will be accretive thereafter. The transaction is expected to close in the third quarter, pending regulatory approvals and closing conditions.

Equifax's DMS division has approximately 200 full-time employees, and, upon closing, will be integrated into Epsilon's business under its Epsilon Targeting and Marketing Technology groups.

The transaction ties into Alliance Data's strategy of seeking strategic acquisitions that improve its core capabilities, according to Epsilon president Bryan Kennedy.

"We're excited about the business synergies and strategic fit," said Kennedy. "Equifax's DMS brings in to the fold several appealing aspects."

Specifically, Equifax should provide Epsilon with new data sets, and verticals including telecommunications and financial services; additional scale in database development and hosting; additional clients; additional analytics; and management expertise.

Epsilon firmly rooted itself in permission-based email marketing with the acquisition of Bigfoot Interactive for $120 million in 2005.

In early 2006, Epsilon acquired DoubleClick's email business for an estimated $90 million -- and later that year acquired Abacus, which manages databases for catalog companies, from DoubleClick for $435 million.

In a recent review of email service providers conducted by Forrester Research, Epsilon ranked among the "leaders" in the "large enterprise deployment" category.

For the study, Forrester surveyed some 218 clients by phone, and used sixty-nine criteria to gauge ESPs divided into three buckets: current offering, strategy and market presence.

In the report, Forrester also found that client demands may be intensifying. "Email marketing frequency is growing," the report said, because the channel may be a more efficient tactic.