GUS (Great Universal Stores), the owner of Experian, plans to separate Experian by December 2006. The date was finally disclosed by John Peace, chief executive of GUS according to the Financial Times (2006-02-27). Analysts estimate the value of Experian at US$ 11.2bn (parent company current market capitalization is US$ 16bn). The valuation is significantly higher compared to the current market capitalization of Equifax and D&B. This raises the question what do analysts value specifically in Experian that warrants such a premium?
|Company||2005 Revenue||Market Cap||P/S Multiple|
|Experian||US$ 2.38 bn*||US$ 11.2 bn**||4.7 X|
|Equifax||US$ 1.44 bn***||US$ 4.77 bn***||3.3 X|
|Dun & Bradstreet||US$ 1.44 bn***||US$ 4.91 bn***||3.4 X|
|* £ 1.362 bn Source: GUS||*** Source: Yahoo Finance March 07/06||** £ 6.4bn Analyst Estimates|
Perhaps the answer lies in the fact that GUS has spent more than US$ 1.75 bn on nearly 80 acquisitions during the past few years to move Experian into wider markets. As a result Experian has now a significant lead over Equifax, D&B and Trans Union (privately held).
Who will be the likely new owner? Private equity groups are gearing up to acquire this pricy jewel of consumer and business information services. Where will they take the business? Most likely into geographic areas were Experian has low market share or hardly any presence. For management and competitors it will be no more business as usual.