A British retailing conglomerate said Thursday it had acquired Experian Corp., the credit data company formerly known as TRW, for $1.7 billion.
The deal promises to transform Experian into a global force in the growing market for consumer data bases, which are in seemingly insatiable demand from financial institutions.
The buyer, Great Universal Stores PLC, is best known as a catalogue marketer and owner of the Burberry's brand. But it also owns CCN Group, a diversifed information and processing company that is second in the U.S. credit scoring industry to Fair, Isaac & Co.
Experian and CCN Group are to be combined under a holding company, CCN Experian, based at CCN headquarters in Nottingham, England. The name will later be reduced to just Experian.
Eric Barnes, deputy chairman of Great Universal Stores, which created the credit information company in 1980, will be chairman. John Peace, chairman and chief executive officer of CCN Group, will be the new holding company's CEO.
D. Van Skilling, the TRW veteran who is Experian's chairman and CEO, will retain those titles at Experian's base in Orange, Calif. He also will be deputy chairman of CCN Experian.
The acquisition took the credit industry by surprise. It came almost two months after Experian was taken private from TRW Inc. in a $1.01 billion transaction engineered by Boston-based investors Thomas H. Lee Co. and Bain Capital Inc.
Analysts believed the Boston companies, which had a history of being long-term investors, would acquire smaller niche companies to complement Experian. On Oct. 30, Experian had registered with the Securities and Exchange Commission for an initial public offering to sell a minority interest. Senior executives at Experian found out about the sale to Great Universal late Tuesday.
Bain and Lee had "mixed emotions about selling," Mr. Skilling said, but "the strategic fit is overwhelming."
Thomas H. Lee managing directors Anthony DiNovi and Scott Sperling issued a statement saying that "since the business prospects for Experian are extraordinary, this was a difficult decision for the management and the shareholders."
With combined revenues this year of almost $800 million and customers in more than 40 countries, CCN Experian is viewed as a competitive threat to Equifax Inc., an Atlanta-based consumer information company with aggressive global ambitions.
Raimundo Archibold, an analyst with Gerard Klauer Mattison & Co., said Equifax has been especially successful in aligning itself with many of the U.S.-based credit card companies setting up operations in the United Kingdom. Mr. Archibold said CCN hopes Experian will contribute the aggressive U.S. marketing style that is fast being exported to the U.K.
"I would imagine that they will try to mirror a lot of what we have done," said Thomas F. Chapman, executive vice president of Equifax and architect of its global diversification from a "plain vanilla" credit bureau. "We are in a lot of similar markets as CCN, and they will be good competition."
CCN has operations in 40 countries, and Experian operates credit bureaus in Mexico and Canada as well as the United States. "It's nice to have that pipeline installed," Mr. Skilling said of CCN's global presence.
Experian's U.S. customer list overlaps with that of CCN Group. Customers also doing business with Experian - including large numbers of banks and other major lenders - represent about 30% of CCN's U.S. sales.
The news of the merger prompted speculation about how Trans Union Corp., the other major U.S. credit bureau, might respond. Mr. Archibold said a logical partner might be First Data Corp., the biggest provider of credit card processing, a business in which CCN and Equifax also compete.
"Trans Union is sort of the odd man out," he said. "The knee-jerk reaction would be that they have to do something, too."
