Experian buys Hitwise for $240M

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Information solutions company Experian has acquired Internet intelligence firm Hitwise for $240 million.

The transaction is subject to regulatory approval and is expected to close next month. Hitwise, which has more than 200 employees based mainly in Melbourne, New York and London, will form part of Experian Marketing Solutions.

"Hitwise is a strategic acquisition for us for several reasons," said Paul Brooks, chief financial officer for Experian, during a Web cast announcing the acquisition yesterday. "Firstly, it continues the process of repositioning Experian's Marketing Solutions business, taking us where our clients are going as they switch more of their advertising spend online."

Founded in 1998, Hitwise collects and aggregates information from Internet Service Providers on how more than 25 million consumers use and search the Internet in the United States, Britan, Australia and other countries in the Asia Pacific. Using proprietary technology, Hitwise reports on nearly a million Web sites each day and sells this information to companies who market their services online. Hitwise has more than 1,200 clients across numerous sectors including financial services, media, travel and retail.

The acquisition follows several key acquisitions Experian has made in the past 18 to 24 months. These include Clarity Blue (acquired January 2006), PriceGrabber.com (acquired in December 2005), Baker Hill (acquired in August 2005), and LowerMyBills.com (acquired in May 2005). Earlier this week, Experian announced that it has acquired Inform@rketing, one of Brazil's leading providers of direct marketing services.

Mr. Brooks said 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, Experian's e-mail delivery and analytics company.

Hitwise also has clear barriers to entry, Mr. Brooks said.

"[Hitwise] has a unique business model in terms of its data, including historical data, its proprietary technology, and its ISP relations," he said. "And this is a source of long-term competitive advantage."

Mr. Young also said Hitwise operates in high-growth markets, and has a clear strategy for organic growth.

Experian said Hitwise has increased its customer base by more than 40 percent in the last two years; has a good track record; selling additional products to existing clients; continues to develop its proprietary technology to provide marketers with new ways of analyzing Internet activity; and has the opportunity to move into other parts of Western Europe and Asia.

Finally, Mr. Young said it has an attractive and scalable business model, "which gives us confidence in its future…performance."

By March 31, Hitwise is expected to generate sales of approximately $40 million and a small profit, Experian said. Given that the visibility of future revenue is high, Experian expects Hitwise to grow sales by more than 40 percent by March 31, 2008 and generate earnings of $12million to $15 million.

"We are excited to become part of Experian, having worked with them for over four years." said Andrew Walsh, CEO of Hitwise. "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."

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