19th Apr 2007 07:02
Experian Group Limited19 April 2007 Experian Group Limited Acquisition of Hitwise Experian, the global information solutions company, announces that it hasacquired Hitwise, a leading Internet marketing intelligence company, which helpsclients monitor the performance of their websites and target their onlineadvertising spend more effectively. The purchase price is approximately $240mand will be funded from Experian's existing cash resources. The transaction issubject to regulatory approval. Don Robert, Chief Executive Officer of Experian, commented: "We have been successfully repositioning our Marketing Solutions business tomeet our clients' needs as they continue to switch more of their advertisingspend online. Hitwise, which is a rapidly growing, successful business, bringsnew, unique data to Experian and complements the existing data, tools andexpertise that we already offer to clients in other areas such as researchservices and email distribution." Andrew Walsh, Chief Executive Officer of Hitwise, said: "Over the last 10 years, Hitwise has developed a truly unique digitalintelligence service that helps inform the online marketing strategies of 1,200clients around the world every day. We are excited to become part of Experian,having worked with them for over four years. We will now be able to accelerateHitwise's growth and profitability through access to Experian's wider pool ofdata, tools and clients, while more quickly expanding our global footprint." Description of Hitwise Founded in 1998, Hitwise collects and aggregates information from InternetService Providers (ISPs) on how over 25 million consumers use and search theInternet in the US, UK, Australia and other countries in Asia Pacific. Usingproprietary technology, Hitwise reports on nearly a million websites each dayand sells this information to companies who market their services online. Thedata allows companies to benchmark their websites against competitors in termsof visitor market share, visitor profiles and time spent on sites. It also helpscompanies to determine which are the best websites on which to advertise, whichsearch engines drive traffic to their sites and which key words are mosteffective. To safeguard consumer privacy, the data excludes personally identifiableinformation and is aggregated into socio-demographic marketing segments. Hitwiseowns this data once it has been processed. Hitwise has over 1,200 clients across numerous sectors including financialservices, media, travel and retail. Hitwise's clients include HSBC, AXA, Google,eBay, CBS News, ask.com, IKEA, MTV and Qantas. The top ten clients only accountfor 5% of sales. 43% of sales are generated in the US, 36% in the UK and 21%from Australia and Asia Pacific. Hitwise benefits from clear barriers to entry,reflecting the scale of its operations, the quality of its data and its longterm ISP relationships. Rationale for acquisition The acquisition of Hitwise continues the repositioning of Experian's MarketingSolutions activities. Companies are increasingly shifting from mass marketingthrough established media, such as direct mail, to more targeted marketingthrough many more channels, including email, Internet and mobile devices.Through its expertise in website monitoring, Hitwise extends the range ofmarketing services that Experian can offer its clients. Hitwise strengthens Experian's position in market research by bringing new,unique data to Experian on how consumers behave online, to complement ourexisting knowledge of how they behave offline. Hitwise's services are alsocomplementary to other Experian products. For example, Hitwise will leverage thesales and distribution network of CheetahMail, our email delivery and analyticscompany. Hitwise operates in high growth markets. It is estimated that total US onlineadvertising spend, for example, will grow by about 20% CAGR between 2005 and2010 to $32bn as Internet usage by both consumers and businesses grows (source:Interactive Advertising Bureau). This growth in Internet advertising is fuellingdemand from companies to target better their advertising spend (be it for searchmarketing, local search or banner advertising) and to measure its effectiveness.Hitwise helps companies achieve both these objectives. Hitwise has good organic growth prospects, driven by: • adding new clients in existing geographies - Hitwise has increased its customer base by more than 40% in the last two years; • selling additional products to existing clients - Hitwise has a good track record; • product innovation - Hitwise continues to develop its proprietary technology to provide marketers with new ways of analysing Internet activity; and • geographic expansion - Hitwise has the opportunity over time to move into other parts of Western Europe and Asia. Financial performance Hitwise has an attractive financial model. Revenue is highly predictable asclients generally pay annual licence fees in advance and customer retentionrates are high. Cost growth is also relatively low once critical mass has beenreached in a market, as Hitwise pays for the data from the ISPs once and thenresells it many times. This model underpins Hitwise's expected future growth. In the year to 31 March2007, Hitwise is expected to generate sales of approximately $40m (ayear-on-year increase of about 50%) and a small profit. Given that thevisibility of future revenue is high, Experian expects Hitwise to grow sales bymore than 40% in the year to 31 March 2008 and generate EBIT (beforeamortisation of acquisition intangibles) of $12-15m. The acquisition is expectedto be neutral to Benchmark earnings* in the year to March 2008 and generate apost-tax double-digit return in the third full financial year on a fully-taxedbasis. Hitwise, which has been acquired from its original backers and management, willform part of Experian Marketing Solutions. Hitwise has over 200 employees basedmainly in Melbourne, New York and London. The acquisition is expected to closein May 2007. Enquiries Experian Paul Brooks Chief Financial Officer 020 3042 4215Fay Dodds Director of Investor Relations Finsbury Rollo Head 020 7251 3801James Wyatt-Tilby Experian announcements are available on www.experiangroup.com There will be a conference call today at 9am UK time to discuss thistransaction. Slides accompanying this call can be either downloaded or viewedlive in conjunction with the conference call by visiting www.experiangroup.com.A recording of the call will also be available later in the day on the website. All financial information is based on unaudited management accounts. Certainstatements made in this announcement are forward-looking statements. Suchstatements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward-looking statements. *Benchmark earnings: earnings before amortisation of acquisition intangibles,goodwill impairments, changes in respect of demerger-related equity incentiveplans, exceptional items, financing fair value measurements and taxation. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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