Marketing giant Affinion Group Holdings Inc. has canceled its planned initial public offering of stock, with the company deeming market conditions not optimal but leaving the door open for a future offering.
Affinion filed in June for a $600 million IPO, nearly two years after the company was spun out of the former Cendant as an independent company controlled by Apollo Management.
Affinion runs various marketing campaigns for corporate clients, signing up their customers for memberships in “clubs” that offer various rewards programs. The company also uses its membership model to sell accident and term-life insurance.
Competitors include Affinion”™s Norwalk neighbors Vertrue Inc., which was taken private in August, and Webloyalty.com Inc., which has numbered among the fastest-growing private companies in the nation.
In the first nine months of 2007, Affinion had a $157 million loss ”“ half its losses of a year ago ”“ as revenue has climbed 23 percent to $984 million.
Despite the improved results, Affinion has suffered a significant contraction in its North American membership. On average in the third quarter, the company had 1 million fewer retail consumers enrolled in its membership programs compared to a year ago, and 300,000 fewer corporate members in its North American wholesale programs.
By contrast, its international division is booming, with the company adding 500,000 members in the past year.
Spokesman Todd Smith said Affinion expected the member attrition as it focuses its efforts on members that spend more on average. Affinion increased in annualized net revenue per member $5 in the third quarter to more than $74 per member.
Affinion”™s business has been impacted in part by acquisitions among banks that use its services, which have delayed introducing new programs as they consolidate operations. As some banks have taken services in house, such as credit-card monitoring and identity theft protection offerings, Affinion has had to reduce or eliminate commissions it makes for signing up new members.
While the company narrowly missed posting an operating profit in the third quarter, it has shelled out more than $100 million this year to service $1.3 billion in long-term debt and other liabilities it is carrying.
The company had intended to use the IPO proceeds to repay some debt, redeem preferred stock and pay off a fee owed Apollo, and for general corporate purposes.
Affinion was not the only company to crumple its IPO plans ”“ Greenwich paper industry investor Atlas Industries Holdings L.L.C. did so as well on Oct. 30, and in mid-November a half-dozen other companies nationwide filed IPO registration withdrawals.
Â
