Veda chair Helen Nugent backs the $2.5 billion takeover bid. Photo: Sasha WoolleyVeda Group chairman Helen Nugent says the “substantial premium” built into the $2.5 billion takeover bid from credit data giant Equifax made it impossible for the board to turn down.
“It is a wonderful business, but the board has to act in the best interests of shareholders. There was a lot of consideration, but we ultimately determined that the bid was at a substantial premium and it offers cash certainty for shareholders,” Dr Nugent told Fairfax Media.
The Veda board compared the offer to a range of recent deals, she said. This included Dublin-based Experian’s $US1.5 billion ($2.06 billion) purchase of 29.6 per cent of Brazil’s Serasa, taking it to full ownership, on an enterprise to earnings before interest, tax, depreciation and amortisation valuation of 15.7 times in October 2012. By comparison, the Veda bid represents a multiple of 18.1 times EBITDA.
The Veda board also compared the offer to Equifax’s $US1 billion purchase of CSC’s credit bureau, also in 2012.
Equifax made its first takeover approach in September and subsequently raised its original bid from $2.70 a share to $2.82 to snare its prize. Shareholders will vote on a scheme of arrangement to approve the deal early in 2016.
The board “has entered into a binding agreement with Equifax Inc, whereby Equifax will acquire all of the shares of Veda at a price of $2.825 cash per share, by way of a scheme of arrangement”, the company said in a statement to the Australian stock exchange. Veda has 846.4 million shares outstanding.
Veda’s shares closed 2.23 per cent up at $2.75 on Monday, after closing unchanged on Friday at $2.69. Higher price
“The offer price of $2.825 cash per share is a higher price than Veda has previously traded at since it listed in December 2013,” Veda said.
Equifax chairman and chief executive Richard Smith said the agreement was subject to approval from foreign investment regulators in Australia and New Zealand, as well as Veda shareholders.
“This acquisition will provide a strong platform for Equifax to offer new data and analytics services in Australia and other markets in this region, using our technology and expertise developed over many years in the US and the 18 other geographies in which we operate,” he said.
Equifax, with a market cap of $US13 billion, is one of the largest credit bureaus in the world. Mr Smith said at its third-quarter results briefing on October 22 that it might use the purchase of Veda as a stepping stone to expansion into Asia.
Veda already owns credit bureaus in Singapore, Indonesia, Malaysia and Cambodia through joint ventures.
Equifax management declined to comment until the deal is complete.
The first of two court hearings to approve the scheme of arrangement will happen on December 11. Shareholders will vote on the deal on February 8, 2016, with completion due by February 25.
Veda is advised by Macquarie Group and Herbert Smith Freehills, while Equifax is advised by UBS.
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