A year to the day after announcing its biggest acquisition ever, TRW Inc. on Monday closed its $330-million cash purchase of Chilton Corp., a rival credit-reporting company based in Dallas.
Chilton’s operations will be folded into TRW’s Information Services division in Orange, making TRW the nation’s largest credit-reporting agency, according to Edward Freeman, a TRW vice president and project manager for the acquisition.
Credit-reporting firms collect past debt repayment information on millions of Americans. The information is then sold to banks, merchants and many other creditors.
TRW is strong on the East and the West coasts, Freeman said. But the firm had been trying to build up its operations state by state in the rest of the country, an expensive proposition with no guarantee of achieving a significant market share.
Mid-Country Market Share
The acquisition of Chilton, the nation’s fourth-largest credit reporting company, gives TRW the operations and the market share it was seeking in the middle of the country, according to Freeman.
“This acquisition gives us quality information in all 50 states,” he said.
None of TRW’s 1,900 information services employees will be affected, he said, but about 900 Chilton employees, mostly in Dallas, will be laid off.
The transaction took a year to close mainly because the Justice Department had to review the merger for its effect on competition and for possible violations of federal antitrust laws, according to Susan Murdy, a TRW spokeswoman.
Justice Department officials approved the deal last Tuesday after TRW and Chilton agreed to sell information services operations in areas where the two companies overlap.
TRW sold its operations in Arizona, Texas, Colorado, Connecticut, greater Detroit, greater Boston and Syracuse, N.Y. In addition, it won’t renew contracts with agencies in Hawaii, Rhode Island and Framingham, Mass. Chilton will end its operations in Rochester, N.Y., Manchester, N.H., and Santa Fe and Albuquerque, N.M.
Those actions reduced the sale price by $30 million. The original agreement called for Cleveland-based TRW to pay $360 million to Chilton’s parent, privately held Borg-Warner Corp. in Chicago.
The deal, coupled with a joint-operating agreement between two other competitors, reduces the major players in the credit reporting field from five firms a year ago to three.
It also intensifies the battle between TRW and Equifax Inc. in Chicago. In the last year, Equifax bolstered its position with a 10-year agreement to work with CSC Credit Services in Houston, the smallest of the five major credit-reporting firms. The arrangement is aimed at Equifax’s eventual acquisition of CSC.
Neither of the two top companies releases comprehensive financial data. But the combined TRW-Chilton operation will issue about 185 million credit reports a year, compared to about 170 million reports for the Equifax-CSC combination.