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Experian dives on costly deal

Experian splashes out on an $850m US acquisition, but the deal gives the market cold feet
November 6, 2013

Credit analytics group Experian's (EXPN) shares dropped 6 per cent on news of a costly US acquisition and first-half results that caused some brokers to reassess organic growth prospects. Experian reported 6 per cent organic revenue growth and said that second-half organic revenue growth would be at a similar level. Technically, this is in line with previous guidance for mid to high single-digit organic growth, but some analysts had pencilled in a figure towards the top of that range, so there was some disappointment.

IC TIP: Hold at 1186p

Separately, Experian announced the proposed $850m acquisition of US healthcare payments specialist, Passport Health. The deal values Passport at seven times expected 2013 revenues and takes Experian above its self imposed target of two times for net debt to ebitda. So the $500m share buyback, $322m of which has been completed so far, has been put on hold.