Credit reporting giant Experian Corp. has been acquired by a major British retailing and financial services conglomerate in a $1.7-billion deal that creates one of the world's largest consumer credit data companies.
The all-cash deal, which closed just before midnight, 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, 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 the acquisition won't affect Experian 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 say 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 Services--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 in 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 three 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 Trans Union Corp. for their U.S. credit information and marketing data needs.
Skilling will be deputy chairman of the holding company and 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 not push ahead with a proposed $265 million initial stock offering to generate funds to repay debt. Great Universal is a public company, with shares trading 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," said Skilling.
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 shouldn't 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.
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 this year.
Other credit reporting companies, including $1.7-billion information giant Equifax, are bigger when their business credit, direct marketing, information software and other units are added in.