Experian Is Bought by British Conglomerate
Credit reporting giant Experian Corp. has been acquired by a major British retailing and financial services conglomerate for $1.7 billion in a deal that creates one of the world’s largest consumer credit data companies.
The all-cash deal, which closed just before midnight Wednesday PST, also puts nearly $700 million in the pockets of a private investment group that bought Experian for $1.01 billion from Cleveland-based TRW Inc. just two months ago.
The purchase by Great Universal Stores Plc., owner of the Burberry’s retail chain, was worked out in an intense series of negotiations that began as soon as Experian split from TRW in September.
Experian Chairman and Chief Executive D. Van Skilling said the acquisition was the “fastest and best” way to achieve his goal of taking the company global.
Great Universal, a $4.2-billion retailing, financial services and real estate holding company, will merge its CCN Group credit reporting subsidiary into Experian under a new holding company to be called CCN Experian. Ultimately, all of its services will be marketed under the Experian name, Skilling said.
The merger has been approved by federal regulators. British authorities raised no objections, a CCN spokesman said.
Skilling said that the acquisition will not affect Experian’s operations or employment and that the company will remain headquartered in Orange.
Some consumer advocates voiced concerns that the merger could weaken hard-won controls on the use of personal credit data if Experian were to begin sharing with CCN and its clients the data it keeps on 190 million people and 14 million businesses in the U.S.
But industry insiders said that European privacy laws are stricter than U.S. laws and that there is little likelihood that new problems will crop up.
Credit reporting companies in the U.S. came under fire in the late 1980s for sloppy controls, and Experian’s predecessor--TRW Information Systems--was considered a leader in the industry effort to restrict access to credit files and improve the accuracy of information in them. Skilling, in fact, testified before Congress in 1992 in favor of increased federal regulation of his industry.
Skilling, who headed Experian when it was TRW’s information services unit, said in an interview Thursday morning that he has talked with the British company “off and on” for years about some kind of strategic marketing alliance. He said that as soon as Experian became an independent company two months ago, “this deal became my No. 1 priority.”
Among other things, Skilling sees the deal as a way to increase Experian’s U.S. market share. “About 30% of their business in the United Kingdom is with U.S. companies with operations there,” Skilling said of CCN. Experian believes it will be able to market itself in the U.S. to those CCN clients that now use competitors such as Equifax Inc. in Atlanta, New York-based Dun & Bradstreet or Chicago’s TransUnion Corp. for their U.S. credit information and marketing data needs.
Skilling will be deputy chairman of the holding company and remain chairman and chief executive of Experian Inc. Great Universal’s deputy chairman, Eric Barnes, will be chairman of the holding company, and CCN Group Chairman and Chief Executive John Peace will be chief executive of the combined companies. The board of directors will have five members from CCN and four from Experian.
As a result of the transaction, Experian will scrap plans for a $265-million initial public stock offering to raise funds to repay debt. Great Universal Stores is a public company, with shares traded on the London stock exchange.
Each company will continue operating in its existing markets, and the two will divide the rest of the world into exclusive territories for expansion efforts.
The merger “provides a conduit for our products and services into areas they serve in Europe, South Africa and Turkey and a conduit for them to market unique services through us in North America,” Skilling said.
While most of the companies’ services and information products overlap, each has specialties that now will be shared.
“They have [software] products that help businesses pick the best sites for new facilities, for instance, and we have products that help small businesses make decisions” about financing and credit issues, Skilling said. “We can add their products to our offerings here, and they can add ours in their markets.”
Equifax spokesman Norman Black said the merger should not affect competition in the credit and marketing information business. “There were three major players in the U.S. market yesterday, and there are still three today,” he said Thursday.
Experian reported $540 million in revenue last year, and CCN posted sales of $134 million. Skilling said the combined companies’ revenue should exceed $700 million in the current fiscal year.
Other credit reporting companies, including $1.7-billion information giant Equifax, are bigger when their business credit, direct marketing, information software and other business units are added in.
But CCN Experian officials said they believe their company will have the largest consumer credit reporting business. If so, it will be by a narrow margin, however. Equifax reported nearly $600 million in consumer credit business for just the first nine months this year.
CCN and Equifax compete in England. Equifax’s Black said his company has “50% of the market there, and we do not fear competition” from the new CCN Experian.
Skilling, though, seemed confident that the deal will ratchet up the level of competition and said the merged company will be “a powerful global presence in the fastest-growing sector of the world economy.”
While best known for consumer credit reports, Experian has pushed development of numerous software-based services that help businesses predict credit-worthiness, develop direct marketing campaigns, obtain detailed demographic information about market areas and make financial decisions.
CCN also is heavily involved in business-oriented services, including commercial credit reports and marketing data.
“Our global customers,” said Skilling, “will benefit from having more seamless access to information tools and services in key international markets.”
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Experian’s Experience
Experian Corp., formerly TRW Information Systems Division, has been purchased by Great Universal Stores Plc., which owns the largest credit reporting firm in the United Kingdom and Europe. Details on the two firms:
Experian Corp.
Headquarters: Orange
Chairman/CEO: D. Van Skilling
Background: Formerly TRW Information Systems Division, a consumer and business credit reporting agency; sold for $1 billion in September to an investor group that included Skilling and other top managers
Employees: 3,410, including 1,410 in Orange County
1995 revenue: $540 million as TRW Information Systems
Purchase price: $1.7 billion
Great Universal Stores Plc.
Headquarters: Manchester, England
Chairman: Lord Wolfson of Sunningdale
Divisions: CCN Group, a leading provider of credit and marketing information in the United Kingdom and Europe; retail clothing stores, including Burberry’s and Scotch House; retail catalogs, banking, corporate finance and property investment
Fiscal 1996 sales: $4.2 billion
Source: Great Universal Stores Plc., Experian Corp., Times reports; Researched by JANICE L. JONES / Los Angeles Times
