Equifax Inc. is seeking to move into the Australian market with a takeover offer for credit information provider Veda Group Ltd. Veda indicated that it had received an indicative, nonbinding offer from Equifax valuing the company at AUS$2.28 bn. Veda said it had received a cash offer from Equifax to buy the company at A$2.70 a share. The indicative offer represents a 35% premium to Veda’s closing share price Thursday September 17th.
Equifax is taking advantage of the recent share price decline of 18 per cent since July 31. The $2.70 bid is only a 20 per cent premium to Veda’s volume weighted average price of $2.25 in the six months to the opening of trade on Friday morning Sept. 18th.
If a takeover is successful, it would give Equifax a foothold in the region at a time when Australia is adopting a comprehensive credit reporting regime that brings it into line with most of the developed world, including many of the countries where Equifax already operates. Equifax has no meaningful presence in Australia or New Zealand. Neither does it hold a sizable investment anywhere in Asia except in India where it holds a minority interest in one of the four credit bureaus. Veda holds credit information on about 20 million individuals and 5.7 million businesses in Australia and New Zealand. It has investments in Singapore and the Middle East where it has provided credit bureau software to local credit bureau operators.
The offer comes as Australia adopts comprehensive credit reporting, an effort to expand credit-history sharing under a voluntary reporting system adopted by the financial industry. Analysts have said the system, which is expected to take several years to roll out fully, promises a lift in revenue for companies such as Veda since it will open up additional information about the accounts individuals have and how well they meet repayments.
Veda was floated on the Australian stock exchange in late 2013 by Pacific Equity Partners, which led a takeover of the company in 2007. The private-equity firm in February moved to sell its remaining shares in Veda. The company reported a net profit of A$78.4 million on revenue of A$338.8 million in the year through June.
Any offer is subject to conditions including due diligence and approval from regulators including Australia’s Foreign Investment Review Board, which advises the government on foreign takeovers.