GUS plc, the retail and business services group, today announces that Experian has acquired 100% of the share capital of LowerMyBills.com, a leading online generator of mortgage and other loan application leads in the United States. The purchase price is $330m, plus a maximum performance-related earn-out of $50m over the next two years. The acquisition is being funded from GUS’ existing banking facilities.
LowerMyBills.com is complementary to Experian’s existing direct-to-consumer activities and operates in large, fast-growing markets. The acquisition is expected comfortably to exceed GUS’ financial target of generating a double-digit post-tax return on investment over time and is immediately accretive to earnings.
Don Robert, Chief Executive Officer of Experian, commented:
“This acquisition represents a step-change in building Experian’s direct-to-consumer activities. With LowerMyBills.com, we will now assist consumers in making the most cost-effective financial services decisions, while also providing our lender clients with high-quality leads for new borrowers. The strategic fit could not be better and we are delighted to welcome the talented people of LowerMyBills.com to Experian.”
|David Tyler||Finance Director||020 7495 0070|
|Fay Dodds||Director of Investor Relations|
|Rupert Younger||020 7251 3801|
Development of Experian Interactive
Experian is establishing leading positions in various markets in connecting consumers with companies via the Internet. Its strategy is to offer a wide range of products that assist consumers in managing the financial aspects of key life events such as moving house or buying a car. Experian enables consumers to find financial products and services that best suit their needs, while helping companies to find new customers quickly and effectively.
As well as LowerMyBills.com, the newly-formed Experian Interactive operation includes Consumer Direct (selling credit reports, scores and monitoring products to consumers) and MetaReward and Affiliate Fuel (both of which generate online leads for clients).
Description of business
LowerMyBills.com’s vision is to provide consumers with a one-stop Internet destination to obtain better deals on all their recurring monthly expenses. Founded in 1999, it has a leading position in the US market, connecting consumers seeking home mortgages with lenders best suited to provide them. The mortgage sector today accounts for the great majority of its revenue, with the balance being in other sectors such as automotive lending, credit cards and insurance. LowerMyBills.com was privately owned and has 176 employees based in Santa Monica, California.
It attracts customers for mortgage lenders and others by advertising on a wide variety of websites, including the major portals such as MSN, AOL and Yahoo!. Consumers who click through on mortgage ads, for example, are taken to the LowerMyBills.com website, where they provide information relevant to the mortgage approval process. This information is then matched against the lending criteria of the clients of LowerMyBills.com and qualifying leads are passed on to several different lenders. The lenders then contact the consumer who can choose the most appropriate offer. LowerMyBills.com is paid for every lead passed on to each lender.
On a pro-forma basis, sales in the year to 31 March 2005 were $120m with operating profit of $26m. Further strong growth in sales and profit is expected in the current financial year and beyond.
This acquisition is attractive because:
LowerMyBills.com operates in large, fast growing markets
More 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 by over one-third in the last five years.
Of the $22bn, about $1bn is currently spent online and this is growing by about 30% a year. Consumers’ use of the Internet for information, products and services associated with key life events has increased significantly, as they switch from more traditional channels. For example, Experian estimates that the percentage of mortgages originated online will treble between 2003 and 2008.
LowerMyBills.com has a strong market position
LowerMyBills.com is the most visited home loan service on the Internet. In a highly fragmented market, it is one of only two players of scale with its online leads generating more loans than any individual lending institution. It has strong relationships with more than 400 lenders, including five of the top ten mortgage providers in the United States.
LowerMyBills.com has attractive growth prospects on a stand-alone basis
Having grown its sales significantly over the last three years, LowerMyBills.com has further exciting growth opportunities available to it:
LowerMyBills.com will benefit from becoming part of Experian
Over time, LowerMyBills.com will benefit from the skills, expertise and client relationships within Experian: