CUC Buying Ideon, Troubled Credit Card Registry

Ending several months of speculation, CUC International of Stamford, Conn., emerged Monday as the buyer of troubled Ideon Group Inc.

CUC, a provider of home shopping and marketing services, said it had agreed to pay $375 million in stock.

Ideon, best known for its SafeCard credit card loss-protection registry, suffered a number of costly setbacks in recent years. Its chairman, Paul G. Kahn, was dismissed in January.

Mr. Kahn had tried to diversify Ideon into new marketing ventures, such as a Professional Golfers Association credit card that is no longer being actively marketed. It also failed with a registry of missing children, Family Protection Network.

The SafeCard business was what mainly appealed to CUC.

Citing the credit card protection service that Ideon/SafeCard markets through banks and other issuers, CUC chairman and chief executive Walter Forbes said, "This acquisition is an outstanding strategic fit."

Ideon will bring 13 million SafeCard subscribers to CUC, which has about 500,000 subscribers in its own Credit Card Protection Program.

The deal is "a great fit for both companies," said Steven Kernkraut, an analyst at Bear Stearns & Co. "For CUC, it expands their membership base and product offerings."

He added that while Ideon has "bombed on a number of products," SafeCard has continued to be a profitable business.

"It makes enormous sense from both perspectives," said Leslie Nelkin, an analyst for Furman Selz. "SafeCard services is a proven product, with 13 million as a customer base. CUC is a distributor of other services that can leverage Ideon's customer base."

Mr. Nelkin said the acquisition price was attractive, though Ideon's reputation has been "clouded by negative press."

Bill Lackey, a spokesman for Jacksonville, Fla.-based Ideon, said the SafeCard program had $187 million in 1995 revenues. Ideon, which is also in the vehicle-fleet services business, reported $234 million in total sales and a loss of $49.4 million.

CUC, meanwhile, has done some diversifying of its own. It surprised investment analysts in February when it said it would acquire two California software companies for about $2 billion. CUC was known more for home shopping, credit card protection, and discount coupon programs before making the move into interactive consumer services.

Under the terms of the acquisition agreement, Ideon common stock will be converted into CUC common stock with an aggregate value of $13.50 a share. Ideon has 28 million common shares outstanding.

Ideon's "credit card business has been lagging of late," Mr. Nelkin said. "But as part of a larger entity, it may be able to rebuild the credit card registration area."

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