Alliance Data's Epsilon Business To Acquire Hyper Marketing, One Of The Nation's Largest Digital Agencies

   Alliance Data's Epsilon Business To Acquire Hyper Marketing, One Of The
                      Nation's Largest Digital Agencies

Combination with Existing Epsilon Assets Solidifies Next Gen Agency Model;
Will Create Nation's Leading Digital Agency

PR Newswire

DALLAS, Nov. 9, 2012

DALLAS, Nov. 9, 2012 /PRNewswire/ -- Alliance Data Systems Corporation (NYSE:
ADS), a leading provider of loyalty and marketing solutions derived from
transaction-rich data, today announced that it has reached an agreement to
acquire the Hyper Marketing ("HMI") group of companies, the largest privately
held marketing services agency in the United States.


HMI offers the full breadth of ROI-based marketing services through Ryan
Partnership, CatapultRPM, SolutionSet and, including: digital
user experience design technology, specializing in websites, social media
platforms and mobility; customer relationship marketing; consumer promotions
marketing; direct and digital shopper marketing; distributed and local area
marketing; and analytical services that include brand planning and consumer
insights. HMI is privately owned by Lake Capital and its affiliates, and has
approximately 1,100 employees based primarily in Chicago, San Francisco and
Wilton, Conn.

Strategic Fit: Provides Digital Capabilities, New Verticals, Scale, and Top

The $400 billion annual marketing spend in North America continues its secular
shift away from traditional general advertising and toward measurable,
ROI-based targeted marketing. It is estimated that this latter market is now
50 percent of the total market and growing at a consistent mid to
high-single-digit pace annually.

The ability to successfully navigate and leverage the benefits of this vast
and growing market requires a new breed of agency that focuses on building
customer connections. This agency model drives business performance through
dynamic engagement and meaningful customer experience, and requires a number
of critical capabilities. Epsilon is currently the only end-to-end solution
offering the "critical five" capabilities that provide the optimal suite of
solutions to capitalize on this secular shift, with a focus on meeting the
changing set of needs at the CMO level:

1.Strategy/creative – working with the C-Suite to conceptualize, develop and
    execute comprehensive brand marketing strategies focused on customer
    acquisition, retention and brand loyalty
2.Data – providing clients with unique, proprietary insights into their
    customers' behaviors and channel preferences through transactional,
    demographic and psychographic data
3.Database – processing significant amounts of consumer data and populating
    sophisticated loyalty and acquisition marketing platforms to enable
    dynamic marketing initiatives
4.Analytics – using advanced analytic techniques to discern and optimize
    customer behavior
5.Distribution – optimizing consumer targeting by leveraging all
    communications channels, including permission-based email, targeted
    display, mobile, social, direct mail and point-of-sale

The acquisition of HMI further expands and enhances Epsilon's current
ROI-based marketing services, specifically:

Expansion into Key Industry Verticals: Epsilon's previous agency acquisition,
Aspen, added significant depth in automotive, telecom, and consumer product
goods (CPG). HMI will add additional scale and capabilities to CPG, telecom,
retail and financial services, as well as expand into other key verticals such
as energy, fitness, quick service restaurants (QSR) and technology.

Increases Critical Scale: While Epsilon currently has critical mass in all
five above areas, the acquisition of HMI will essentially double the size of
Epsilon's agency offering. As such, Epsilon will have far more strategic
resources to interact with and assist C-Suite executives, thus enhancing the
potential for offering adjacent and complementary services through a "one-stop

Adding to Blue Chip Client Roster: HMI brings an enviable roster of leading
global brands, including Mars, Unilever, The Home Depot, and Kellogg, with top
clients showing longstanding tenure of more than seven years.

Expands Digital Capabilities: Epsilon's 45 billion plus permission-based
email circulation numbers make it a top tier player in this important part of
the digital spectrum. HMI allows Epsilon to further expand capabilities in
key digital channels including mobile, social, targeted display, tablet and
web development, and importantly, in the user experience design and creative
services that are essential to create compelling content and applications for
these channels.

Adds Key Talent: Led by industry veteran Zain Raj, HMI has a deep "bench" of
tenured and experienced talent. Epsilon and Alliance Data are excited about
the fit and synergies associated with HMI's management and capabilities,
including the opportunity to further drive growth across the combined

Financial Rationale: In 2013, HMI is expected to generate approximately $300
million in revenues and $50 million in EBITDA. It has demonstrated a strong
track record of organic growth, averaging in the high-single digits during the
past few years. This organic growth rate is expected to continue going
forward, equating to approximately 3 times expected GDP growth trends. Total
consideration to be paid for HMI and existing obligations will be
approximately $460 million, subject to working capital and other adjustments,
or a multiple slightly over 9 times EBITDA. The transaction is expected to be
accretive to both GAAP and Core EPS in 2013, and 2013 guidance will be updated
accordingly when Alliance Data releases its 2012 full year results. Closing is
expected before year-end, subject to customary closing conditions and
regulatory approval.

Leading Digital Agency: Epsilon's 2013 revenue is expected to jump to $1.3
billion following the acquisition of HMI. The powerful combination of agency
and digital assets ("digital agency") will be approximately $500 million and,
based upon published rankings, Epsilon's digital agency is expected to be
among the leading global agencies on a pro-forma basis.

Bryan Kennedy, president of Epsilon, commented, "HMI will be a well-received
addition to the Epsilon family as we formalize our 'agency of the future'
model. By bringing in expertise in new verticals, adding notable scale to
existing verticals and, as importantly, providing us with critical mass across
the entire digital asset spectrum, we're confident that there will be no other
company out there that can deliver what Epsilon can now offer to today's
C-Suite. I'm also looking forward to welcoming HMI's highly talented
associates to the Epsilon family."

Zain Raj, chief executive officer of HMI, stated, "Hyper Marketing's culture
revolves around our clients – everything we do is designed to help deliver
profitable growth while building value in their brands. Combining HMI with
Epsilon will help us provide broader and deeper solutions to our clients in a
way that reflects the ongoing evolution of the marketing landscape. Our team
is particularly excited about the shared values between our organizations.
We're each a highly client-centric culture that delivers unmatched service.
Finally, our complementary strengths across capabilities and verticals will
enable our clients to choose a single partner for more of their marketing
needs, ensuring a smooth ride all the way from strategy to execution without
the frustrating 'hand-offs' of yesterday's fragmented marketing model."

Added Ed Heffernan, Alliance Data president and chief executive officer,
"We're looking at another strong year of organic growth across all three
businesses. Additionally, we've traditionally added a tuck-in acquisition
here and there when it makes sense. We looked at well over 50 companies this
year, got serious about half a dozen of them, and chose only one, HMI."
Heffernan continued, "I would expect Epsilon to represent about a third of
Alliance Data's topline in 2013, and it will have a long runway left to expand
– should be another fun year."

BofA Merrill Lynch acted as financial advisor to HMI on the transaction.

About Epsilon
Epsilon is the global leader in delivering direct-to-customer connections that
drive business performance. Epsilon's integratedsolutions leverage the power
of rich transactional and demographic marketing data, strategic insights,
analytics, award-winning creative and robust digital and database marketing
technologies to connect brands with consumers both online and offline,
increasing engagement to generate measurable marketing outcomes. Founded in
1969, Epsilon works with over 2,000 global clients and employs over 3,500
associates in 37 offices worldwide. For more information, visit, follow us on Twitter @EpsilonMktg or call 1.800.309.0505.

About Alliance Data
Alliance Data® (NYSE:ADS) and its combined businesses is North America's
largest and most comprehensive provider of transaction-based, data-driven
marketing and loyalty solutions serving large, consumer-based industries. The
Company creates and deploys customized solutions, enhancing the critical
customer marketing experience; the result is measurably changing consumer
behavior while driving business growth and profitability for some of today's
most recognizable brands. Alliance Data helps its clients create and increase
customer loyalty through solutions that engage millions of customers each day
across multiple touch points using traditional, digital, mobile and other
emerging technologies. Headquartered in Dallas, Alliance Data employs nearly
9,000 associates at more than 50 locations worldwide.

Alliance Data is a leading provider of marketing-driven credit solutions, and
is the parent company of Epsilon®, a leading provider of multi-channel,
data-driven technologies and marketing services, and LoyaltyOne®, which owns
and operates the AIR MILES® Reward Program, Canada's premier coalition loyalty
program. For more information about the company, visit our web site,, or you can follow us on Twitter at

About HMI
Hyper Marketing is a global company and the largest independent
marketing-services network in North America.The company has 1,100 employees
in 23 offices, with expertise in digital, direct, data, promotions, shopper
marketing, Hispanic, and media buying and planning. HMI focuses on driving
transactions by responding to changing consumer behavior in a hyper-connected
world. HMI companiespartner with CMO's of many of the world's best known
brands including Dell, eBay, Kellogg's, Office Depot, The Home Depot and
Unileverto develop integrated programs that deliver profitable results. For
more information visit

About Lake Capital
Lake Capital is a private equity firm that focuses on investments in
service-based enterprises across various industries. The firm currently
manages more than $1.3 billion in equity commitments and seeks to build
leading services companies through organic and acquisition-enhanced growth.
More information about Lake Capital is available at 

Alliance Data's Safe Harbor Statement/Forward Looking Statements
This release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements may use words
such as "anticipate," "believe," "estimate," "expect," "intend," "predict,"
"project" and similar expressions as they relate to us or our management. When
we make forward-looking statements, we are basing them on our management's
beliefs and assumptions, using information currently available to us. Although
we believe that the expectations reflected in the forward-looking statements
are reasonable, these forward-looking statements are subject to risks,
uncertainties and assumptions, including those discussed in our filings with
the Securities and Exchange Commission.

If one or more of these or other risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may vary
materially from what we projected. Any forward-looking statements contained in
this presentation reflect our current views with respect to future events and
are subject to these and other risks, uncertainties and assumptions relating
to our operations, results of operations, growth strategy and liquidity. We
have no intention, and disclaim any obligation, to update or revise any
forward-looking statements, whether as a result of new information, future
results or otherwise, except as required by law.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this presentation regarding Alliance Data Systems
Corporation's business which are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion of such
risks and uncertainties, which could cause actual results to differ from those
contained in the forward-looking statements, see "Risk Factors" in the
Company's Annual Report on Form 10-K for the most recently ended fiscal year.
Risk factors may be updated in Item 1A in each of the Company's Quarterly
Reports on Form 10-Q for each quarterly period subsequent to the Company's
most recent Form 10-K.

SOURCE Alliance Data Systems Corporation

Contact: Alliance Data, Julie Prozeller - Analysts/Investors, FTI Consulting,
+1-212-850-5721,; or Shelley Whiddon - Media,
+1-214-494-3811,; or Epsilon, Jessica Nable -
Media, +1-212-457-7135,
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