Ex­pe­rian to buy far smaller ri­val

The credit re­port gi­ant is to pay $207.5 mil­lion for Mighty Net of Cal­abasas.

Los Angeles Times - - Business - E. Scott Reckard scott.reckard@latimes.com

Credit re­port gi­ant Ex­pe­rian is ac­quir­ing Cal­abasas­based Mighty Net Inc., a far smaller ri­val in the busi­ness of sell­ing con­sumers in­for­ma­tion about their files at the three large credit track­ers — Tran­sUnion, Equifax and Ex­pe­rian it­self.

Ex­pe­rian, which is based in Dublin, Ire­land, is pay­ing $207.5 mil­lion for Mighty Net, ac­cord­ing to an Ex­pe­rian state­ment.

Mighty Net charges about $15 a month to al­low con­sumers to con­tin­u­ously monitor their files and credit scores. The com­pany op­er­ates three web­sites: Cred­itRe­port.com, Cred­itScore .com and MyCred­itS­core .com.

Mighty Net, founded in 1996, has about 680,000 U.S. sub­scribers, ac­cord­ing to the state­ment. Ex­pe­rian, which of­fers some sim­i­lar ser­vices, said it ex­pected to im­prove the re­ten­tion rate of Mighty Net cus­tomers and to sell them ad­di­tional prod­ucts, such as mon­i­tor­ing the In­ter­net for pos­si­ble use of stolen fi­nan­cial in­for­ma­tion.

Ex­pe­rian said “sig­nif­i­cant cost syn­er­gies in the ar­eas of technology, in­fra­struc­ture and back-of­fice func­tions” would en­able it to re­duce Mighty Net’s ex­penses by more than $5 mil­lion a year by 2013.

An Ex­pe­rian spokesper­son said there were no im­me­di­ate plans to re­duce Mighty Net’s work­force.

Carter Mal­loy, an in­for­ma­tion technology an­a­lyst at Stephens Inc., es­ti­mated that Ex­pe­rian has about 33% of the U.S. con­sumer credit mon­i­tor­ing and fraud pro­tec­tion mar­ket com­pared with Mighty Net’s 5%. It’s roughly a $2-bil­lion-a-year busi­ness over­all, with lots of growth po­ten­tial, he said. Mal­loy called Mighty Net a “very at­trac­tive” tar­get for Ex­pe­rian.

Some con­sumer ad­vo­cates ad­vise con­sumers not to spend money on credit mon­i­tor­ing, since any­one can ob­tain a free credit re­port an­nu­ally from each of the credit re­port com­pa­nies.

Also, Cal­i­for­nia re­quires com­pa­nies to pro­vide free credit mon­i­tor­ing to cus­tomers af­fected by data breaches, said Rainey Reit­man, a spokes­woman for the non­profit Pri­vacy Rights Clear­ing­house in San Diego.

“We don’t think con­sumers should have to pay cor­po­ra­tions to pro­tect their iden­ti­ties,” Reit­man said. “Be­sides, these ser­vices don’t pre­vent iden­tity theft — they just alert you af­ter the fact — and a lot of peo­ple mis­tak­enly think they do.”

But Mal­loy said credit mon­i­tor­ing ser­vices can be valu­able for peo­ple who are about to make a ma­jor pur­chase on credit, ap­ply for busi­ness fi­nanc­ing or seek work, since many em­ploy­ers use credit checks to screen work­ers.

Mighty Net, which is pri­vately owned, had 2009 rev­enue of $115 mil­lion and earn­ings be­fore in­ter­est and tax of $28 mil­lion, Ex­pe­rian said in its state­ment.

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