Neustar, Inc. (NYSE:NSR), a trusted neutral provider of real-time information services, announced that it has entered into a definitive agreement to acquire MarketShare Partners, LLC, a fast-growing marketing analytics technology provider to major brands, for $450 million. The purchase price is effectively reduced to approximately $390 million after taking into account tax benefits resulting from the transaction.
MarketShare is a leader in sophisticated analytics and attribution, uniquely connecting strategic Chief Marketing Officer (CMO) decisions to the most tactical of marketing decisions. Utilizing sales, marketing, macroeconomic, and its customers’ proprietary data, MarketShare quantifies the sales impact for leading brands such as MasterCard, Turner Broadcasting System, Intel, USAA, CarMax, and Twitter. MarketShare revenue grew at a compounded annual growth rate of 38% from 2011 to 2014 and generated $57 million in revenue for the twelve months ended September 30, 2015.
The acquisition of MarketShare expands Neustar’s leadership in marketing services by creating a comprehensive data-driven solution enabling CMOs to plan, optimize, and allocate their online and offline marketing budgets. With the two companies’ capabilities combined into a single solution, CMOs will be able to allocate precisely their resources across all sales channels – stores, online, call centers, and sales teams – as well as media platforms – digital, television, radio, print, mobile, out-of-home, and in-store. They will also have the means to make better decisions on such operational factors as staffing, pricing, supply chain, and distribution.
Advances Neustar’s Position as an Information Services Leader
Since 2010, Neustar has been advancing its transformation into a leading information services company by utilizing its unparalleled authentication expertise derived from its history of managing and securing complex, real-time, authoritative datasets. Through organic growth and strategic acquisitions, Neustar has become a leader in marketing, security and data services. This strategy has enabled Neustar to increase its information services revenue from approximately $184 million in 2010 to $489 million in 2014.
Over the same period, Neustar’s revenue from marketing services – one of the fastest growing areas of the information services market – increased from less than $3 million to approximately $147 million. The marketing data and analytics market is expected to grow at 16% a year on an annualized basis through 2018. The differentiated capabilities created through this acquisition will enable Neustar to provide uniquely valuable insights and to forge strong C-suite relationships with leading companies and brands.
Provides Neustar with Scale and Capabilities to Drive Growth and Value for Shareholders
Paul Lalljie, Neustar’s Chief Financial Officer, added, “MarketShare is a fast-growing leader in an important segment of the marketing services industry. With this acquisition, we are gaining scale and unique value-added capabilities in a highly attractive market, which we believe will give us an even stronger foundation to enhance growth and create shareholder value.”
MarketShare is expected to provide positive EBITDA contribution in 2016. The transaction is expected to generate $10 million to $15 million in cost synergies over the next 18 months. Neustar expects to fund the acquisition with a combination of cash on hand and $350 million in committed financing.
The transaction is expected to close in the fourth quarter of 2015 pending Hart-Scott-Rodino approval and the satisfaction of other customary closing conditions. J.P. Morgan is acting as financial advisor and Gibson, Dunn & Crutcher LLP is serving as legal advisor to Neustar.
MarketShare helps marketers grow revenue. Combining advanced analytics technology, scientific leadership and deep domain expertise, MarketShare enables large companies to measure, predict and dramatically improve Marketing’s impact on revenue—typically generating a 20%-30% improvement in marketing effectiveness and 3%-4% revenue increase, yielding a 3x-50x first-year ROI. Widely considered the market leader, MarketShare helps direct tens of billions of marketing investment dollars globally.
Neustar, a former subsidiary of Lockheed Martin (NYSE:LMT), has made six acquisitions to diversify since former AOL (NYSE:AOL) executive Lisa Hook became CEO in 2010. In 2011, Neustar acquired Targus Information for $650 million. Targus provides caller identification services as well as consumer sales-leads to business customers. Neustar aims to grow by providing marketing analytics. The acquisition of MarketShare is another step to overcome the loss of the FCC contract as the Local Number Portability Administrator (LNPA).
Randy Giusto, VP & Lead Analyst, at Outsell Inc. stated in a recent insight: “Neustar continues to find ways to differentiate itself in the marketing services space, while also making acquisitions recently in the security and top-level domain registry spaces. This move adds to past marketing services acquisitions, which include TargusInfo in 2011 and Aggregate Knowledge in 2013. It provides Neustar with capabilities to reach more into the CMO suite. Its PlatformOne solution primarily targets departments and skill sets typically just below the CMO.
The deal also provides Neustar with more visibility into a brand’s total marketing mix, including how brands optimize media buys across online and offline channels. The combination of the two companies provides a multi-layered and detailed approach to marketing services, with marketing strategy solutions for CMOs (MarketShare) coupled with detailed marketing activation and analytics (Neustar) at the execution level. CMOs can integrate their MMM efforts with Neustar data in real time, optimize their media plans, and gain more granular insights at the segment and customer touch level.”