Experian Regulatory News (EXPN)

news release

Definitive agreement to acquire CSIdentity Corporation

19 April 2016 - Experian, the global information services company, is pleased to announce that it has signed a definitive agreement to acquire CSIdentity Corporation ("CSID"), a leading provider of consumer identity management and fraud detection services. The transaction is subject to Hart-Scott-Rodino regulatory approval in the US and other customary closing conditions. The purchase price is US$360m, payable in full at closing, which will be funded from Experian's existing committed bank facilities.

Brian Cassin, Chief Executive Officer of Experian said:

"The acquisition of CSID accelerates execution of our Consumer Services strategy and enables us to address a broader spectrum of the consumer market. By combining Experian and CSID capabilities, we will provide best-in-class products to give consumers greater control over their identity and credit information in one proposition. We look forward to welcoming the CSID team to Experian and building stronger and ever more compelling services which help consumers to protect, manage and make the most of their data. Following completion, we expect CSID to be immediately enhancing to Group earnings."

The identity protection market

Identity theft is a significant and growing concern, with the risk becoming more prevalent as companies store information on consumers digitally and as people share personal information online. Consumers have a heightened desire to protect themselves and are increasingly seeking out personalised solutions to protect their identity. Organisations which have been the victims of criminal activity often have an obligation to assist consumers who may have been affected by a data breach. As such, consumer adoption of identity-related services is increasing, with the US identity protection market estimated to be a US$1.6 billion industry, with opportunities for continued strong growth.

CSID overview and business model

Founded in 2006, CSID established itself as the wholesale technology and services provider to the identity protection industry. It has developed a diverse revenue base, delivering significant growth in clients and revenues to become a major provider of identity services in the US. Its platform currently supports approximately 10 million end consumers across multiple client relationships.

CSID uses its patent-protected technology to access a variety of data and scours the internet in real-time to monitor websites, blogs, bulletin boards and chat rooms to identify the illegal trading and selling of personal information. It provides a range of services, including credit data, to notify consumers of potential abuse of their identities and that their digital identity information is being actively sold or traded on the internet. This helps consumers to take action to protect themselves.

CSID's clients include information services companies, retailers, financial institutions, insurance companies and other institutions with large customer or membership bases. It provides services in a variety of ways: it is the platform that sits behind many other identity solution providers; it provides white-label wholesale identity theft protection to customers who then market identity protection under their own brand; and it provides services to organisations which have been a victim of a data breach. Its revenue model is typically a per-member-per-month fee or a revenue share agreement.

Strategic rationale

CSID is a strong strategic fit for Experian. The acquisition provides an opportunity to significantly improve our market position in the affinity and direct-to-consumer marketplaces, combining best-in-class credit and identity products.

· Experian's ProtectMyID product alerts consumers to potential abuse of their identity information when new credit enquiries are made and accounts are opened in their names. CSID enables us to move beyond credit monitoring and enrich our offer to create a superior identity protection service. This two-level approach, using both credit and identity information, means we will proactively inform a consumer that their identification data has been compromised and advise that stolen identity information is actively being used in credit enquiries.

· Enriching the services we provide to consumers is a key component of our strategy and a significant driver of the success of our premium service, Experian.com. We will attract a broader range of consumers and improve engagement by packaging best-in-class identity protection as part of our premium membership products and as an upsell from our free services.

· In data breach services and our affinity marketing relationships (B2B2C) the addition of CSID will broaden our opportunities with a more attractive offering for identity services. CSID's technology platform is flexible and easily configurable, increasing the speed with which we can bring white-label services to existing and new B2B customers.

· CSID has begun to expand beyond the US market into other key regions. Many of CSID's identity products are borderless and, when combined with our credit data, provide the foundation for a global product proposition for Experian.

Financials

CSID is growing rapidly, driven by new customer acquisitions, the addition of subscribers to its existing client base and the introduction of new services.

Experian and CSID have existing commercial relationships and Experian is one of a number of CSID's data providers. As such, financials are quoted as incremental to Experian on acquisition, after any consolidation adjustments.

· In the year to 31 March 2016, the consolidation of CSID would have added US$103m incremental revenue and US$21m incremental EBIT to Experian's consolidated financial results.

· Taking into account the full year revenue from recent contracted client wins, we expect the acquisition of CSID to add annualised incremental revenues of approximately US$120m and EBIT of approximately US$30m for the year ending 31 March 2017. This is on a pro forma basis and excludes one off acquisition and integration costs.

· In addition, we have significant opportunities to realise cost synergies with CSID over the next 4 years.

· We expect to report one-off integration costs of US$8m in the first 12 months to integrate the business and to realise the planned synergies.

CSID is being acquired from private equity and other investors, management and employees and will form part of Experian Consumer Services in North America.

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About Experian 

We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2015, we were named by Forbes magazine as one of the 'World's Most Innovative Companies'.

We employ approximately 17,000 people in 37 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2015, was US$4.8 billion.

To find out more about our company, please visit http://www.experianplc.com or watch our documentary, 'Inside Experian'.