Experian plc (EXPN) - Proposed acquisition of additional Serasa interest
RNS Number : 2664P
23 October 2012
Experian further strengthens position in Brazil with proposed acquisition of
additional interest in Serasa
23 October 2012 - Experian, the global information services company, is
pleased to announce it has entered into a conditional agreement to acquire a
further interest in Serasa S.A. ("Serasa"). Serasa is the market leading
credit bureau in Brazil in which Experian already owns a 70% stake. Experian
has agreed to acquire a further 29.6% interest to take its holding to 99.6%.
The agreed consideration is R$3.1bn (US$1.5bn)^1 plus a cash adjustment to
the date of completion^2. The transaction is to be satisfied in cash and fully
funded from existing banking facilities^3.
Experian is purchasing the 29.6% interest from a bank group comprising BIU
Participações S.A.(a consortium comprising the stakes in Serasa held by Itaú
Unibanco and Bradesco), Banco Bradesco Financiamentos, Grupo Santander and
BIU Participações S.A.is classified as a related party of Experian by the UK
Listing Authority. Therefore the acquisition of its 24.4% interest in Serasa
is classified as a related party transaction under the UK Listing Rules and
requires the approval of Experian shareholders at a general meeting. The
acquisition is also conditional on approval by the Brazilian authorities.
Assuming all conditions are satisfied, the acquisition is expected to complete
in the fourth quarter of calendar year 2012.
Don Robert, Chief Executive Officer, said:
"Since we acquired the initial stake in Serasa in 2007, the business has
performed very strongly. We have developed and fully integrated the business,
diversified our activities and established a beachhead from which to expand
further in Latin America. We see significant potential for future growth in
Brazil, and we are delighted to have the opportunity to further invest in this
exciting region. We would like to extend our thanks to the minority
shareholders for their strong support over these first five years and we look
forward to a long and productive ongoing commercial relationship."
There will be a conference call today, Tuesday 23 October 2012 for analysts
and investors at 9am (UK time). The participant dial-in number is +44 (0)20
Serasa is one of the largest credit bureaux in the world and is the market
leader in Brazil, with approximately 60% market share. Founded in 1968, Serasa
owns the most extensive databases in Brazil on the credit behaviour of
consumers and companies. It plays an active role in most credit and business
related decisions made in Brazil on a daily basis. Its data-gathering
capabilities are extensive, sourcing data from a network of Brazilian banking,
commercial and judicial organisations. Serasa's databases include payment
practices, public defaults, social and demographic information and economic
and financial information.
Serasa has performed strongly under Experian's ownership, delivering, on
average, annual revenue growth of 20% and EBIT growth of 28% over the last
three years (at constant currency). In Experian's consolidated financial
statements for the year ended 31 March 2012, Serasa generated revenues of
R$1,479m (US$870m) and EBIT of R$531m (US$312m)^4. In recent trading, Serasa
has continued to perform well and in line with our expectations.
Serasa reported gross assets of R$1,428m in its financial statements at 31
Experian acquired an initial 65% stake in June 2007 and subsequently increased
its stake to 70% in October 2007^5. At the time the initial stake was
acquired, put and call provisions were entered into over the minority
shareholding. These became exercisable in June 2012, following which time
Experian and the shareholder banks have sought a negotiated settlement which
also extends pre-existing commercial and data supply arrangements.
In addition to the agreed cash consideration, Experian and the shareholder
banks have agreed:
· Extension of existing agreements to provide negative data, and
commitments for the provision of positive data once the applicable law is
· Extension of minimum purchase guarantees
Experian believes these extensions to existing agreements will continue to
underpin its core data assets and further assist in leveraging the full
Experian product suite in Brazil. This opportunity is further augmented as the
Brazilian government has last week enacted legislation and published final
rules for collection and use of positive data. This will support the
continuation of Serasa's strong growth trajectory in Brazil.
· The Serasa management team will remain unchanged following completion of
· The transaction is expected to be earnings enhancing in the year ending
31 March 2013 and thereafter.
· Subject to further spend on acquisitions in the second half, following
this transaction Experian expects net debt/EBITDA at March 2013 to be at the
top end of the target range for leverage (the target range is 1.75-2.0x).
Related Party Approval Process
BIU Participações is classified as a related party by the UK Listing Authority
as a result of their substantial shareholding in Serasa. The acquisition of
its 24.4% interest is therefore treated as a related party transaction and is
conditional on the approval of Experian shareholders at a general meeting of
A circular setting out further details of the acquisition, together with the
notice to convene a general meeting and the form of proxy for use at the
general meeting, will be posted to Experian shareholders as soon as
practicable. It is expected that the general meeting will be held in the
second half of November. ^
^1 Based on an exchange rate of R$2.03 per US$ as at 19 October 2012.
^2 Calculated as an interest based charge to the date of completion.
^3 Drawings will be made predominantly in US Dollars; the group does not
expect to undertake borrowings in Brazilian Reai.
^4 Based on an exchange rate of R$1.70 per US$.
^5 Following completion of the acquisition of the bank group's 29.6% interest
in Serasa, Experian's cumulative total spend to acquire 99.6% of Serasa is
R$5.6bn. This implies a multiple of approximately 8.5x Serasa's EBITDA for
the year ended 31 March 2012 (EBITDA of R$663m).
Goldman Sachs International and Morgan Stanley provided financial advice to
Experian on this transaction.
Don Robert Chief Executive
Officer +44 (0)20 3042 4215
Brian Cassin Chief Financial
Nadia Ridout-Jamieson Director of Investor
James Russell Communications
Director, UK&I and EMEA
(0)20 7251 3801
Experian is the leading global information services company, providing data
and analytical tools to clients around the world. The Group helps businesses
to manage credit risk, prevent fraud, target marketing offers and automate
decision making. Experian also helps individuals to check their credit report
and credit score, and protect against identity theft.
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 31 March
2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44
countries and has its corporate headquarters in Dublin, Ireland, with
operational headquarters in Nottingham, UK; California, US; and São Paulo,
For more information, visithttp://www.experianplc.com.
Certain statements made in this announcement are forward looking statements.
Such statements are based on current expectations and are subject to a number
of risks and uncertainties that could cause actual events or results to differ
materially from any expected future events or results referred to in these
forward looking statements.
Goldman Sachs International, which is authorised and regulated in the United
Kingdom by The Financial Services Authority, is acting for Experian plc and no
one else in connection with the transaction and will not be responsible to
anyone other than Experian plc for providing the protections afforded to
clients of Goldman Sachs International.
This information is provided by RNS
The company news service from the London Stock Exchange
MSCBKBDNKBDBNKB -0- Oct/23/2012 06:00 GMT
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