Alliance Data Systems Corp. is expanding its Epsilon marketing business through a $345 million acquisition after the unit suffered a large data breach last month.

The Plano, Texas, company said Monday that it is buying Aspen Marketing Services, a West Chicago agency that focuses on digital and direct marketing services in the automotive and telecommunications industries.

Alliance Data said that buying the agency should help build out Epsilon's creative agency services, the smallest of the unit's five main areas of business. The other four are data services, database marketing, analytics and distribution.

The deal is to close this quarter.

"We are committed to transforming our agency business to become a market leader and this acquisition is a very strategic and important move in that direction," Bryan Kennedy, Epsilon's president, said in a press release.

Epsilon plans to combine its existing agency business and Aspen into one platform, keeping the Aspen name for its services. Aspen is expected to generate revenue of $250 million this year, according to Alliance Data.

Reginald Smith, an analyst with JPMorgan Securities, wrote in a research note published Monday that he believes Aspen is a "high-single-digit grower" and that the acquisition would expand the "weakest" of Epsilon's offerings.

Alliance Data last week reported that first-quarter revenue from its Epsilon business grew 23% compared with the year-earlier period, to $155.7 million.

On April 1, Alliance Data disclosed that Epsilon had suffered a data breach on March 30, exposing the names and email addresses of many of its clients' own customers.

Epsilon's clients include Citigroup Inc., JPMorgan Chase & Co., U.S. Bancorp and many large retailers, such as Best Buy Co. Inc. and Verizon Wireless.

Ed Heffernan, Alliance Data's president and chief executive, said last week that the incident had not resulted in any significant loss of business, which the company said was a concern after the breach occurred.

John Williams, an analyst with Goldman Sachs Group Inc., wrote in a research note published Sunday that, though Epsilon likely will remain a growth engine for Alliance Data, "it is still too early to determine whether or not the deal will pose serious client retention issues going forward."

Alliance Data said it expects Epsilon to generate revenue of $1 billion in 2012.

Alliance Data has made acquisitions previously to bolster Epsilon.

In July it bought the direct marketing assets of the credit bureau Equifax Inc. for $117 million to be part of Epsilon.