Acquisition

5 May 2005 07:01

GUS PLC05 May 2005 5 May 2005 GUS plc Acquisition of LowerMyBills.com by Experian for $330m plus earn-out GUS plc, the retail and business services group, today announces that Experianhas acquired 100% of the share capital of LowerMyBills.com, a leading onlinegenerator of mortgage and other loan application leads in the United States. Thepurchase price is $330m, plus a maximum performance-related earn-out of $50mover the next two years. The acquisition is being funded from GUS' existingbanking facilities. LowerMyBills.com is complementary to Experian's existing direct-to-consumeractivities and operates in large, fast-growing markets. The acquisition isexpected comfortably to exceed GUS' financial target of generating adouble-digit post-tax return on investment over time and is immediatelyaccretive to earnings. Don Robert, Chief Executive Officer of Experian, commented: "This acquisition represents a step-change in building Experian'sdirect-to-consumer activities. With LowerMyBills.com, we will now assistconsumers in making the most cost-effective financial services decisions, whilealso providing our lender clients with high-quality leads for new borrowers. Thestrategic fit could not be better and we are delighted to welcome the talentedpeople of LowerMyBills.com to Experian." Enquiries GUSDavid Tyler Finance Director 020 7495 0070Fay Dodds Director of Investor Relations FinsburyRupert Younger 020 7251 3801Rollo Head GUS announcements are available on its website, www.gusplc.com. For further information on Experian Interactive, visit our websites:www.LowerMyBills.com; www.ConsumerInfo.com; www.freecreditreport.com;www.MetaReward.com; www.AffiliateFuel.com Acquisition of LowerMyBills.com Development of Experian InteractiveExperian is establishing leading positions in various markets in connectingconsumers with companies via the Internet. Its strategy is to offer a wide rangeof products that assist consumers in managing the financial aspects of key lifeevents such as moving house or buying a car. Experian enables consumers to findfinancial products and services that best suit their needs, while helpingcompanies to find new customers quickly and effectively. As well as LowerMyBills.com, the newly-formed Experian Interactive operationincludes Consumer Direct (selling credit reports, scores and monitoring productsto consumers) and MetaReward and Affiliate Fuel (both of which generate onlineleads for clients). Description of businessLowerMyBills.com's vision is to provide consumers with a one-stop Internetdestination to obtain better deals on all their recurring monthly expenses.Founded in 1999, it has a leading position in the US market, connectingconsumers seeking home mortgages with lenders best suited to provide them. Themortgage sector today accounts for the great majority of its revenue, with thebalance being in other sectors such as automotive lending, credit cards andinsurance. LowerMyBills.com was privately owned and has 176 employees based inSanta Monica, California. It attracts customers for mortgage lenders and others by advertising on a widevariety of websites, including the major portals such as MSN, AOL and Yahoo!.Consumers who click through on mortgage ads, for example, are taken to theLowerMyBills.com website, where they provide information relevant to themortgage approval process. This information is then matched against the lendingcriteria of the clients of LowerMyBills.com and qualifying leads are passed onto several different lenders. The lenders then contact the consumer who canchoose the most appropriate offer. LowerMyBills.com is paid for every leadpassed on to each lender. On a pro-forma basis, sales in the year to 31 March 2005 were $120m withoperating profit of $26m. Further strong growth in sales and profit is expectedin the current financial year and beyond. This acquisition is attractive because: LowerMyBills.com operates in large, fast growing marketsMore than 20m American households take out a new mortgage each year. In 2004,home lenders spent $22bn on acquiring customers, an amount which has grown byover one-third in the last five years. Of the $22bn, about $1bn is currently spent online and this is growing by about30% a year. Consumers' use of the Internet for information, products andservices associated with key life events has increased significantly, as theyswitch from more traditional channels. For example, Experian estimates that thepercentage of mortgages originated online will treble between 2003 and 2008. LowerMyBills.com has a strong market positionLowerMyBills.com is the most visited home loan service on the Internet. In ahighly fragmented market, it is one of only two players of scale with its onlineleads generating more loans than any individual lending institution. It hasstrong relationships with more than 400 lenders, including five of the top tenmortgage providers in the United States. LowerMyBills.com has attractive growth prospects on a stand-alone basisHaving grown its sales significantly over the last three years, LowerMyBills.comhas further exciting growth opportunities available to it: - it can improve the performance of its operating model. For example, it can increase the distribution of its ads through more partnerships with top web publishers. It can also increase the number of lenders it works with to improve consumer choice in more states across the US - it can strengthen its position in various parts of the mortgage market; - it can broaden its portfolio by offering new financial services products such as health, life and automotive insurance; - it can help consumers save money in other areas of recurring monthly expenses such as telephone and utilities bills; and - it can apply its operating model in new countries. LowerMyBills.com will benefit from becoming part of ExperianOver time, LowerMyBills.com will benefit from the skills, expertise and clientrelationships within Experian: - Consumer Direct, MetaReward and LowerMyBills.com all work in the same Internet space and can share expertise and traffic. Combined, these businesses have more than 29 million visitors to their websites each month; and - there are also benefits of LowerMyBills.com working more closely with Experian's Credit business. The introduction of Experian's modelling and analytical capabilities will allow it to improve the quality of leads passed to lenders. Experian will also be able to sell LowerMyBills.com's services to its existing financial services clients, where it has strong relationships. This information is provided by RNS The company news service from the London Stock Exchange