Equifax will pay $1 billion in cash to buy the credit services business of Computer Sciences (CSC).
CSC Credit Services owns consumer credit files in 15 states, covering 20 percent of the U.S. population. It has been Equifax's largest credit affiliate since 1988 and Equifax has been processing CSC's credit information and selling those files nationally since that time.
CSC supplies information to banks, mortgage companies, retail establishments, the automotive industry, medical entities, utility companies and other users of financial and credit information.
The deal is expected to help boost the long-term growth of Equifax's U.S. consumer information solutions unit, Equifax Chairman and CEO Richard F. Smith said in a news release. The unit provides consumer information products to businesses in the U.S., including online credit data and credit-decision technology services.
The deal is part of Computer Sciences's efforts to "rebalance its portfolio of services," the Falls Church, Va., company said in a news release. The after-tax proceeds from the sale would be roughly $750 million to $800 million. Computer Sciences intends to use $300 million to $400 million to repurchase shares and contribute $300 million to $400 million to its pension plans. The remainder would apply to general corporate purposes.
The purchase price is subject to further adjustment after closing for the actual amount of working capital acquired by Equifax. However, Equifax does not expect any further changes will be material, it said.
The deal, scheduled to close by the end of the year, is expected to be accretive to Equifax's adjusted earnings per share in 2013. It should generate $115 million to $125 million in net operating revenue for Equifax, Smith said.
Equifax would fund the purchase using debt and available cash. Equifax, based in Atlanta, was ranked No. 20 on Bank Technology News's 2012
