Last updated: November 6, 2013 6:28 pm

Experian acquires US data group for $850m

Experian, the UK credit information business, has made its third acquisition this year with the $850m purchase of a US healthcare data provider. News of the deal sent shares in the group down more than 6 per cent amid fears that it had overpaid.

Passport Health Communications helps 2,500 hospitals across the US manage payments between patients, insurers and government schemes. It is the latest in a string of acquisitions for Experian, which last month bought web-fraud detection group 41st Parameter.

The company has spent $1.2bn since the start of April on deals as it seeks to expand.

“We’re willing to invest pretty aggressively in the biggest global growth opportunities, which include fraud prevention and healthcare,” said Don Robert, chief executive.

Shares in Experian, which fell 80p to £11.83, were also hit by lower-than-expected half-year profits and the suspension of a $500m share buy-back programme.

Pre-tax profits for the half-year, adjusted for exceptional items, rose 2 per cent to $573m.

Kean Marden, analyst at Jefferies, cut its rating on Experian from buy to hold. “The debate today will centre on value creation after another sizeable acquisition. Although the Passport Health Communication transaction should be earnings per share accretive, we believe [its] earnings before interest and tax need to increase from $30m to $80m to cover its cost of capital.”

The FTSE 100 company first entered the US healthcare payments market five years ago and has steadily expanded its position through investments and acquisitions. Mr Robert said that there may be opportunities to use the technology provided by Passport Health Communications in the UK, where business has been growing aggressively, with sales up 7 per cent over the past six months.

“There are similar pressures on operating efficiencies in the NHS and private parts of the UK healthcare system,” he said.

Established in 1995, Experian employs 17,000 staff in 40 countries. The company is best known for running consumer credit checks for banks, landlords and retailers but has been pushing into fraud detection, which now accounts for about 6 per cent of global business. The company said that an explosion in online fraud as a result of the sharp increase in ecommerce would provide ample opportunities for growth.

Experian reported pre-tax profits of $480m, including exceptional items, compared with $73m in the same period last year. Revenues rose to $2.34bn compared with $2.29bn in the same period in 2012.

Basic earnings per share from continuing operations rose sharply to 34 cents compared with 7 cents in the same period in 2012. This enabled the group to announce an interim dividend of 11 cents per ordinary share, a 7 per cent increase.

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