Experian Group Limited: Acquisition of Hitwise

    LONDON, April 19 /PRNewswire/ -- Experian, the global information
solutions company, announces that it has acquired Hitwise, a leading
Internet marketing intelligence company, which helps clients monitor the
performance of their websites and target their online advertising spend
more effectively. The purchase price is approximately $240m and will be
funded from Experian's existing cash resources. The transaction is subject
to regulatory approval.
    Don Robert, Chief Executive Officer of Experian, commented:
    "We have been successfully repositioning our Marketing Solutions
business to meet our clients' needs as they continue to switch more of
their advertising spend online. Hitwise, which is a rapidly growing,
successful business, brings new, unique data to Experian and complements
the existing data, tools and expertise that we already offer to clients in
other areas such as research services and email distribution."
    Andrew Walsh, Chief Executive Officer of Hitwise, said:
    "Over the last 10 years, Hitwise has developed a truly unique digital
intelligence service that helps inform the online marketing strategies of
1,200 clients 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 accelerate Hitwise's growth and profitability through access to
Experian's wider pool of data, tools and clients, while more quickly
expanding our global footprint."
    Description of Hitwise
    Founded in 1998, Hitwise collects and aggregates information from
Internet Service Providers (ISPs) on how over 25 million consumers use and
search the Internet in the US, UK, Australia and other countries in Asia
Pacific. Using proprietary technology, Hitwise reports on nearly a million
websites each day and sells this information to companies who market their
services online. The data allows companies to benchmark their websites
against competitors in terms of visitor market share, visitor profiles and
time spent on sites. It also helps companies to determine which are the
best websites on which to advertise, which search engines drive traffic to
their sites and which key words are most effective.
    To safeguard consumer privacy, the data excludes personally
identifiable information and is aggregated into socio-demographic marketing
segments. Hitwise owns this data once it has been processed.
    Hitwise has over 1,200 clients across numerous sectors including
financial services, 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 account for 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 long term ISP relationships.
    Rationale for acquisition
    The acquisition of Hitwise continues the repositioning of Experian's
Marketing Solutions activities. Companies are increasingly shifting from
mass marketing through established media, such as direct mail, to more
targeted marketing through many more channels, including email, Internet
and mobile devices. Through its expertise in website monitoring, Hitwise
extends the range of marketing 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
our existing knowledge of how they behave offline. Hitwise's services are
also complementary to other Experian products. For example, Hitwise will
leverage the sales and distribution network of CheetahMail, our email
delivery and analytics company.
    Hitwise operates in high growth markets. It is estimated that total US
online advertising spend, for example, will grow by about 20% CAGR between
2005 and 2010 to $32bn as Internet usage by both consumers and businesses
grows (source: Interactive Advertising Bureau). This growth in Internet
advertising is fuelling demand from companies to target better their
advertising spend (be it for search marketing, 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 as clients generally pay annual licence fees in advance and
customer retention rates are high. Cost growth is also relatively low once
critical mass has been reached in a market, as Hitwise pays for the data
from the ISPs once and then resells it many times.
    This model underpins Hitwise's expected future growth. In the year to
31 March 2007, Hitwise is expected to generate sales of approximately $40m
(a year-on-year increase of about 50%) and a small profit. Given that the
visibility of future revenue is high, Experian expects Hitwise to grow
sales by more than 40% in the year to 31 March 2008 and generate EBIT
(before amortisation of acquisition intangibles) of $12-15m. The
acquisition is expected to be neutral to Benchmark earnings* in the year to
March 2008 and generate a post-tax double-digit return in the third full
financial year on a fully-taxed basis.
    Hitwise, which has been acquired from its original backers and
management, will form part of Experian Marketing Solutions. Hitwise has
over 200 employees based mainly in Melbourne, New York and London. The
acquisition is expected to close in May 2007.
    Experian announcements are available on http://www.experiangroup.com
    There will be a conference call today at 9am UK time to discuss this
transaction. Slides accompanying this call can be either downloaded or
viewed live in conjunction with the conference call by visiting
http://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.
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and are
subject to a number of risks and uncertainties that could cause actual
events or results to differ materially from any expected future events or
results referred to in these forward-looking statements.
    *Benchmark earnings: earnings before amortisation of acquisition
intangibles, goodwill impairments, changes in respect of demerger-related
equity incentive plans, exceptional items, financing fair value
measurements and taxation.


SOURCE Experian