Experian Buys Direct Mail Company for $246.2 Million

In a move that vastly extends its reach into direct marketing, credit information giant Experian Inc. said Monday that it has bought one of the nation’s biggest direct mail companies for $246.2 million, most of it in cash.

Experian, formerly the financial information business unit of TRW Inc., said the acquisition of Direct Marketing Technology Inc., based in the Chicago area, makes it the nation’s third-largest direct mail operation.

The acquisition also should increase the clout of Experian’s British parent, Great Universal Stores LPC, which received about a third of its $1.9 billion in income last year from catalog sales in Europe and South Africa.

D. Van Skilling, Experian’s chief executive, said the deal should not involve any layoffs. Direct Marketing, which has 570 employees, will be a wholly owned subsidiary operating under its present management, he said.

Orange-based Experian and Direct Marketing have complementary product lines. While their merger might not increase the number of pitches that arrive in the daily mail, it is likely to increase consumers’ chances of receiving catalogs and advertising material that closely reflect their buying patterns.

Companies that provide mailing lists that can help reduce or eliminate unwanted material can claim a big competitive edge in the $178.5-billion-a-year direct mail market in the U.S., analysts say.

Skilling said Direct Marketing recently developed a database that enables more than 170 catalog marketers to use the purchasing histories of 98 million mail-order buyers to help refine and customize their mail lists. Great Universal could gain access to the database by contributing its own catalog customer information.

Direct Marketing already handles 13% of all the direct mail in the United States--an estimated 10 billion pieces a year--and is a major provider of marketing information to the catalog industry and to high-technology and general retail businesses. Its clients range from Eddie Bauer and Victoria’s Secret to America Online and Micro Warehouse.

Experian collects credit information and prepares credit reports on more than 140 million people and 14 million businesses. The company also collects and analyzes information on real estate sales, foreclosures and mortgage lending activities in most major U.S. markets.

The company develops programs that enable it to prepare custom direct mail lists for a variety of marketers, including those that mail pre-approved credit card applications or credit purchase plans.

This is Experian’s first major acquisition since its $1.7-billion merger last year with Great Universal’s CCN Group information services subsidiary.

Experian paid $222.5 million cash for Direct Marketing and agreed to assume liability for $23.7 million of the company’s debt. Experian also agreed to pay Direct Marketing’s shareholders as much as $52.5 million over the next four years, based on the company’s continuing performance.

Direct Marketing reported a $15-million operating profit on $65 million in revenue for its fiscal 1996, which ended Nov. 30. Experian, which has 6,500 employees worldwide, reported $720 million in revenue for its 1996 fiscal year.