First Data Corp., Atlanta, looking to shed its Donnelley Marketing operation to better focus on the payment processing and e-commerce sides of its business, has found a buyer in InfoUSA, Omaha, NE, which will pay $200 million in cash for the consumer database and marketing services provider.
Yesterday’s action resembles a strategic alliance more than a purchase as InfoUSA will now license its business and consumer databases to FDC, said chairman/CEO Vin Gupta. In essence, FDC will buy back data from InfoUSA that it currently owns. The move enables FDC to still offer information-based solutions without supporting the database infrastructure itself.
“First Data is focused on the future. That future includes maximizing success in key areas that present the best strategic and financial opportunities,” said FDC president/COO Charles Fote. FDC is divesting Donnelley just weeks after announcing its purchase of processing rival Paymentech, Dallas, for $408 million.
InfoUSA gains consumer data and database marketing services that it can cross-sell with its business database offerings. The company estimates that Donnelley, with annual revenues over $90 million, will generate 30 percent of total annual revenues.
“It’s really hard to sell a database without an existing relationship, now by being one family we are the one contact for data,” Gupta said.
Donnelley brings demographic consumer data more robust than InfoUSA’s existing database of 180 million consumers and adds psychographic data, Gupta said. Donnelley’s DQI database compiles demographic records on 170 million consumers, including 50 million homeowners while its ShareForce database maintains psychograhic data on 23 million consumers compiled from lifestyle surveys. The firm has also brings new database management services developed in anticipation of its spinoff last month from First Data Solutions.
Industry sources say InfoUSA paid a premium for a piece of business FDC had long wanted to jettison. The reaction on Wall Street seemed to confirm that feeling as FDC gained 2 11/16 to close at 47 5/8 June 1 while InfoUSA rose 5/16 to 6 7/16. Donnelley was acquired by FDC in 1996 and combined with First Data Infosource to form First Data Solutions.
The Donnelley purchase is not a substitute for Metromail, which InfoUSA bid for unsuccessfully last year. However, Donnelley does bear ties to Metromail as both were once subsidiaries of commercial printer R.R. Donnelley & Sons.
“Donnelley Marketing is a much cleaner company,” Gupta said. “Metromail had a lettershop and all of that. Donnelley is purely a database marketing company.”
Like the Metromail bid, which he lost to Great Universal Stores’ Experian, Gupta will finance the Donnelley purchase with a recently issued $195 million credit facility.