Experian signs agreement to sell controlling interest in Email/Cross-Channel Marketing in a further step to sharpen strategic focus
Experian announces that it has signed a definitive agreement to sell its Email/Cross-Channel Marketing business (CCM) to Vector Capital.
The enterprise value of CCM at completion is c. US$400m on a cash and debt free basis. Experian has agreed to divest a 75% interest in CCM to Vector Capital, with Experian retaining the balance. The transaction is subject to customary closing conditions and is expected to complete during the first half of the financial year ending 31 March 2018.
“Two years ago we introduced our new strategy and one of its five key pillars has been to further focus our portfolio. In November 2016, we stated that following a strategic review of Marketing Services we saw fewer synergies between CCM and other parts of Experian. CCM has been a great investment for Experian, having rapidly grown from small acquisitions to become one of the leading global players in the industry. With the actions we’ve taken over the past two years to further improve the business, it is starting to regain momentum, and under new ownership it is well positioned to continue to make progress.
“Vector Capital is a leading technology investor with a strong track record. The combined expertise of the CCM and Vector Capital operating teams will draw on the strength of both the CCM team and of industry leaders hired by Vector Capital, including Peter McCormick, the co-founder of ExactTarget. This will enable CCM to realise its ambition to serve the biggest brands in the world and fully seize the opportunities ahead. We believe this will lead to significant future benefits for Vector Capital, Experian and the CCM team.”
CCM provides services which help clients to develop, target and deliver marketing offers to consumers through email and across multiple online channels. It has formed part of Experian’s Marketing Services business.
In view of our agreement to sell a controlling stake, CCM will be treated as a discontinued operation in the Group’s financial statements for the year ended 31 March 2017. As such CCM’s contribution will be excluded from organic revenue growth, Benchmark profit before tax and Benchmark earnings per share (EPS). For the year ended 31 March 2017, CCM is expected to generate EBIT of c. $52m and has a pro forma effect on Benchmark EPS of 3 cents, before taking into account the redeployment of net cash proceeds.
Net proceeds on closing to Experian will be 75% of the enterprise value, and will be after transaction costs and taxes. Experian will retain a 25% equity interest in CCM and a seller note for US$75m. On a pro forma basis net debt to EBITDA is expected to be c.1.9-2.0x at 31 March 2017, compared to the Group’s target range of 2-2.5x.
Source: Experian Press Release