Equifax Inc., the consumer credit reporting company, has agreed to acquire Integratec Inc., which performs debt collection and other back-office functions for credit card issuers and other lenders.

Equifax announced the agreement in principle last week but gave no details about the price or other terms of the deal. The Atlanta-based company also did not allow senior executives to discuss the purchase.

But it is clear that Integratec, also based in Atlanta, would represent a sizable expansion, adding almost 1,000 employees to Equifax's 12,000.

Sophisticated |Teleservicers'

Industry observers see Equifax and Integratec as a potent match.

Both companies have sophisticated "teleservicing" back offices that make and receive large volumes of phone calls. There are opportunities for synergy, for example, between Integratec's collections and telemarketing businesses and Equifax's Telecredit card-processing operation.

Equifax released a written statement that Integratec fits its strategy of providing "a total solution to [customers'] risk management needs by delivering more innovative information-based products and services."

Integratec, founded in 1987, was a trailblazer in the business of "prechargeoff collections." Integratec found that by contacting lapsed borrowers at an early stage of delinquency, many chargeoffs could be avoided. This was attractive to many credit card banks that had found the traditional collection process unwieldy and expensive.

Branching Out

The privately held company later entered the post-chargeoff recovery business by acquiring DCI, a major Houston-based collection agency, and a smaller operation in Buffalo that has grown to 165 employees, said Donald K. Griffin, president of Integratec.

"Eighteen months ago we started teleservicing, using our resources to help banks acquire customers, prevent attrition, activate cardholders' accounts, and cross-sell services," Mr. Griffin said.

He added that some bank clients buy the complete range of services, thus outsourcing much of their back-office work to Integratec.

In starting Integratec, Mr. Griffin had financial backing from the investment bank Welsh, Carson, Anderson & Stowe and two former partners - A. Wayne Johnson and Jack Gilbride.

Mr. Johnson, a former consultant and former executive of Visa U.S.A. and First Interstate Bancorp, founded a customer-service outsourcing company in 1991 called Qualitech. It was acquired last November by First Data Corp.

He had retained a small stake in Integratec and said he was elated by the acquisition news.

"This is confirmation that our ideas and approach to risk management had real merit," Mr. Johnson said.

"When most people think about Integratec it's about collections, but it's a much more interesting story than that," said James B. Shanahan of Business Dynamics, a White Plains, N.Y., consulting firm that has done some work for Integratec.

"For banks in the credit card business, the alternatives used to be either do everything yourself or be an agent" for another issuer, he said.

"Integratec created a middle ground, where a bank can keep the receivables and take advantage of economies of scale without the hassle of doing its own operational support."

Equifax, having diversified well beyond the credit bureau business, reported a 4% revenue increase last year, to $1.1 billion. Revenue for the second quarter - led by high-margin activities in credit services - was a record $298.5 million, while net income was $23.2 million. Each figure was up 8%.

Net income has been hobbled by losses at High Integrity Systems Inc.. a subsidiary providing lottery services, which is in a breach-of-contract dispute with California.Diversified Equifax1992 income data, in millions Operating income Revenue (loss)Creditinformation $436 $123Paymentservice(*) 197 50Insuranceinformation 398 20Businessservices 103 (8)(*) Includes check authorizationcredit card processing.Source: Annual report

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