JD.com and Alibaba create indexes to identify Chinese shoppers’ spending trends, which help retailers gain insight.
Neustar provides network addressing, routing and policy management services.
STERLING, Va.--Neustar, Inc. (NYSE:NSR) and Targus Information Corporation, or TARGUSinfo, today announced that they have entered into a definitive agreement under which Neustar, a global leader in network addressing, routing and policy management, will acquire TARGUSinfo, a leading, independent provider of real-time, on-demand information and analytics services including Caller ID, for approximately $650 million in cash.
“Given how well our two companies know each other and the compatible cultures, we are confident that the strengths of both platforms will be preserved and that the two companies will be smoothly integrated.”
TARGUSinfo’s services help its customers identify, verify, score and locate their customers and prospects. It processes over 100 billion transactions per year. The company generated approximately $149 million in revenues for the twelve months ended September 30, 2011, representing 20% year-over-year growth, with an adjusted EBITDA margin of approximately 45%, excluding the impact of expenses associated with a 2010 TARGUSinfo recapitalization event.
“This transaction is a significant and logical step in our growth strategy,” said Lisa Hook, president and chief executive officer of Neustar. “Neustar has long provided communications, media and marketing companies with insights derived from their own data. By combining with TARGUSinfo, we will be able to offer a much more diverse portfolio of services in the real-time information and analytics market.”
Acquiring TARGUSinfo significantly extends Neustar’s position in the $30 billion information services market. The transaction combines TARGUSinfo’s leadership in Caller ID and online information services, such as lead verification and scoring, with Neustar’s strengths in network information services, including address inventory management, network security, and marketing analytics. These capabilities, delivered through a trusted, privacy-controlled environment, will greatly extend Neustar’s ability to provide its customers services based on unique, non-replicable datasets.
The transaction is expected to be at least $0.20 accretive to Neustar’s earnings per share in 2012, excluding the impact of the amortization of intangibles and financing fees. Following completion of the transaction, Neustar will have annual revenues of approximately $750 million generated from a more diversified platform of information and analytics services offered to a wider range of enterprises.
Paul Lalljie, Neustar’s chief financial officer, added, “TARGUSinfo, like Neustar, has delivered recurring and growing revenue with attractive margins over many years. By joining forces, we will be able to accelerate our growth, expand our services to customers and diversify our business while maintaining a flexible and efficient capital structure that will support continued growth and the return of capital to shareholders.”
Creating a Leader in Real-Time Information and Analytics
Both Neustar and TARGUSinfo manage unique, secure databases that allow companies to find, connect and authenticate customers across the Internet and voice networks, whether fixed-line, cable, or mobile. Through this acquisition, Neustar will be in a strong position to leverage its databases, patented processes and predictive analytics to provide value-added decision-making support for activities such as media and advertising, e-commerce and risk management for current and new customers.
TARGUSinfo’s capabilities are a natural extension to Neustar’s businesses, which include:
• Managing global telephone number and IP address databases, seamlessly connecting communications service providers’ customers around the world;
• Providing Domain Name System (DNS), geolocation and website performance monitoring solutions for the Internet, as well as managing the registries for the .us, .biz and .co domains, among many others; and
• Serving as the neutral coordinator to the world's leading media companies, enabling consumers to access movies, TV shows and other cloud-based digital content on any device.
Ms. Hook continued, “With TARGUSinfo, we are gaining a highly complementary and profitable set of services and a trusted partner with similar values. Given TARGUSinfo’s compatible business, Northern Virginia location, and the fact that we have known the company for many years, this is a compelling fit for Neustar. As such, we are confident that this transaction will generate significant benefits for shareholders and customers.”
“We are pleased to become part of the Neustar family, a fast-moving, innovative and well-managed industry leader,” said George Moore, president and chief executive officer of TARGUSinfo. “Given how well our two companies know each other and the compatible cultures, we are confident that the strengths of both platforms will be preserved and that the two companies will be smoothly integrated."
Recurring Revenues, High Margins, and More Efficient Capital Structure
For the twelve months ended September 30, 2011, the companies’ combined revenues were $732 million, and their adjusted EBITDA margin was 45%
Neustar expects to fund the acquisition with a combination of cash on hand and $600 million in committed financing.
The Board of Directors authorized the company to repurchase up to $250 million of its Class A common shares on an accelerated basis. This share repurchase program is in addition to the $300 million share repurchase program that Neustar announced in July 2010.
The use of debt to fund the transaction and the repurchase of shares will result in a more efficient capital structure and increased shareholder value.
The TARGUSinfo transaction is expected to close in the fourth quarter pending Hart-Scott-Rodino approval.
Morgan Stanley and Wells Fargo Securities served as financial advisors, respectively, for Neustar and TARGUSinfo. Allen & Company, LLC also provided financial advice to Neustar.