DoubleClick Sells Abacus To Epsilon For $435M

Marketing services company Alliance Data Systems Corp. has agreed to purchase Abacus, which manages databases for catalog companies, from DoubleClick for $435 million.

Abacus currently has deals with about 1,500 catalog companies and retailers to manage their databases; the company also uses information about consumers' purchases--those made via online e-commerce sites as well as call centers--to generate leads for other retailers. Abacus's 525-some employees will join Alliance's Epsilon unit, which offers a host of services to direct marketers, including analytics, database services and multi-channel delivery services.

For DoubleClick, the sell-off ends a merger that sparked controversy from the beginning. In 1999, DoubleClick agreed to purchase Abacus for $1.7 billion, with the goal of merging its online information about consumers with Abacus's offline database.

But consumer advocates immediately warned that DoubleClick's plan to mesh Web data with names, addresses and telephone numbers could compromise consumers' privacy. Ultimately, under pressure from privacy advocates and threatened with potential government intervention, DoubleClick decided against combining its Web-based data with the offline information from Abacus.

Epsilon CEO and President Michael Iaccarino said the company doesn't intend to mesh online and offline information. He said Epsilon mainly will use the Abacus data to bolster direct mail marketing services, but added some Abacus information will be used in e-mail marketing campaigns. For instance, he said, the company will probably send new product offers via e-mail to consumers who have purchased from online catalogs in the past. Still, the acquisition--expected to close within 30 days--isn't being driven by e-mail marketing: "That's not a big part of the play right now," he said.

DoubleClick at the beginning of the year sold its e-mail marketing business to Alliance's Epsilon Interactive for an estimated $90 million.

Last year, DoubleClick was acquired by San Francisco-based private equity firm Hellman & Friedman LLC in a transaction valued at $1.1 billion.

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