Bankrate Inc. announced two deals for online-centric consumer financial information companies, one of which would bring Bankrate into the lead aggregation business.
The New York rate information aggregator said Monday that it would pay $30 million in cash to acquire MMIS Inc., which runs the rate comparison site Interest.com and provides mortgage tables and guides to newspapers. Analysts said MMIS, which was created in 1987 and is based in Villa Park, Ill., is a main competitor to Bankrate in both the online and print areas.
Bankrate also said it would pay $10 million in cash for Wescoco LLC, a San Francisco lead aggregator that was launched last year and does business under the FastFind brand.
Both deals are expected to close Nov. 30 and would be accretive to earnings next year, it said.
Several deals for lead aggregators have been announced this year. Experian Inc. agreed in May to pay at least $330 million for LowerMyBills.com. Last month HouseValues Inc. bought Loan Page Inc. for about $5.25 million.
Thomas R. Evans, who became Bankrate's president and chief executive in July 2004, told analysts this year that it expected to eventually move into lead aggregation.
With that expectation, Bankrate cut the number of lead aggregators that advertise on Bankrate.com this year from seven to two - LowerMyBills.com and iHomeowners Inc.'s LoanWeb - and signed revenue-sharing deals with them that gave it access to data on the business.
(In another significant move, last month Bankrate moved to "cost-per-click" pricing for its online rate tables.)
Colin W. Gillis, an analyst at Adams Harkness Inc., said it was natural for Mr. Evans to want to get into lead aggregation.
"If you think about what is the biggest expense for a lead aggregator, it's advertising. He's got the advertising. He can put it on his own site," Mr. Gillis said.
Bankrate, MMIS, and Wescoco each have a focus on home loans - a business where both online competition and ad spending have been robust this year - though each also deals with other products.
FastFind.com also matches consumers with offers for education, personal, small-business, and auto loans, as well as credit cards. Interest.com also has sections on auto loans, "bad credit," and savings.
MMIS, which stands for Mortgage Market Information Services, publishes mortgage guides in more than 300 newspapers. Bankrate sells rate information to more than 150 publications, including The Wall Street Journal and The New York Times.
Bankrate also said it expects to report pretax earnings between $1.22 and $1.27 a share for next year. The average previous estimate from analysts had called for earnings of 74 cents. For this year, Bankrate expects to report earnings of 76 to 79 cents a share.
Still, the company's shares, which have nearly quadrupled since last summer, dipped slightly in morning trading.
Before an afternoon conference call, Charles E. Trafton, an analyst at Americas Growth Capital LLC, said investors appeared skeptical of what revenue and profits the acquired companies would bring with them. "The market's telling you they don't really believe everything they're hearing."
Bankrate needs to diversify away from mortgages as interest rates rise and lending volumes slow, Mr. Trafton added; if it does not, the sale that many observers expect may be inevitable, he said.
Mr. Gillis said that as advertisers put ever-higher percentages of their budgets to work online, Bankrate would be better positioned.
"We call it a publishers market in '06," he said. "The data we have shows there's plenty of advertisers, and there's not enough places to put the ads."
