Goldman Sachs, Advent to Buy TransUnion
TransUnion Corp. (TRANSU), a provider of credit information to banks and consumers, said Advent International Corp. and Goldman Sachs Group Inc. (GS)’s private equity unit agreed to buy the company from Madison Dearborn Partners and the Pritzker family in the largest leveraged-buyout deal this year.
The transaction, which is expected to be completed by early in the second quarter, values the company at more than $3 billion, according to a statement today from TransUnion. The Chicago-based firm had total debt of $1.6 billion last year, according to public filings, and is preparing to take on $600 million more, according to a Standard & Poor Financial Service’s report issued today, valuing the equity component of the transaction at about $800 million.
“The conversion of cash to plastic is an unstoppable, global trend and several markets would be well served by a credit bureau like TransUnion,” said Philip J. Philliou of New York-based Philliou Partners, a payments consultant. “Global expansion has got to be part of Advent’s investment thesis.”
TransUnion’s owners had initially planned to sell shares in the company to the public, filing in July of last year to raise $325 million in an initial public offering, just before the market rout in the third quarter slowed stock sales. TransUnion and its biggest competitors, including Equifax Inc. and Experian Plc, are now coming under scrutiny as state and federal regulators focus on the practice of providing credit checks to employers.
Bobby Mehta, the company’s chief executive officer, and the rest of the leadership team will remain with TransUnion, according to the statement.
The company has been criticized by civil rights groups and the AFL-CIO, the nation’s largest labor union, who say that credit checks by employers discriminate against black, Latino and unemployed applicants. TransUnion, which keeps credit histories on 500 million consumers and businesses, has led lobbying against state laws restricting the use of such data, those groups said in October.
The U.S. has sued companies such as the Washington Post Co. (WPO)’s Kaplan Inc. education unit over using credit reports in hiring and California’s Democratic Governor Jerry Brown last year signed a law that limits many employers from engaging in the practice.
The Consumer Financial Protection Bureau yesterday proposed a regulation that would let it examine the books of such businesses for the first time. Supervision, the process of examining records and collecting data from companies, can lead to enforcement action if regulators find violations of the law.
“Our proposed rule would mean that those debt collectors and credit reporting agencies that qualify as larger participants are subject to the same supervision process that we apply to the banks,” Richard Cordray, the bureau’s director, said in an e-mailed statement yesterday.
Created as a rail-car holding company in 1968, TransUnion began a credit-reporting business and became the first company to replace physical records with automated tape-to-disc transfer, according to its website. In 2002, the company acquired TrueCredit.com to offer credit services directly to customers online, expanding beyond credit reporting and business-to-business services.
In April 2010, Madison Dearborn, a Chicago-based private equity firm, acquired a 51 percent stake in TransUnion from the city’s Pritzker family.
Advent International, based in Boston, focuses on international buyouts, strategic repositioning opportunities and growth buyouts. Goldman Sachs will be making the investment out of its $20.3 billion GS Capital Partners VI (PEF3230) Fund LP raised in 2007.
Bank of America Merrill Lynch and Deutsche Bank AG (DBK) advised TransUnion on the deal. Advent International and GS Capital Partners were advised by Evercore Partners Inc. and Goldman Sachs, with Deutsche Bank and affiliates of Goldman Sachs providing bank and bridge financing commitments.
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