Experian shares slump after US health purchase

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EXPERIAN shares fell 6.4 per cent yesterday after the credit-checking group said it plans to spend $850m (£528m) on a US healthcare business, as it revealed subdued growth in the last six months.

The firm said Passport Health Communications, which offers admin and credit checks to US healthcare providers, will help it expand in new markets in the States to offset sluggish business linked to mortgage approvals.

The deal will be paid for using Experian’s existing banking facilities, but some analysts said the transaction could prove risky given the ongoing Obamacare reforms.

The Passport purchase has also prompted Experian to suspend its share buyback programme.

Experian had spent $322m on buying back shares from investors at the end of September, having committed in May to buying back $500m worth in the next 12 months.

The company, best known for running consumer credit checks for banks, landlords and retailers, said it would stop returning money to shareholders via the buyback following its latest acquisition.

“There’s a little bit left to go but it doesn’t make sense to continue,” chief executive Don Robert said.

For the six months to the end of September, Experian posted a three per cent rise in revenues to $2.3bn, while earnings before tax and interest also rose three per cent to $608m.

The firm, which makes half of its revenues in North America, said its core consumer services business had grown eight per cent since last year.

Robert said the results showed “another successive half year of good organic growth”, adding that he expects further steady expansion in the next six months.

Bank of America Merrill Lynch downgraded the stock to “neutral” from “buy”, citing the stock’s high valuation and disappointment over its rate of organic growth.

“Investors may also question the shift in capital allocation to more expensive M&A,” it said.