CSC Credit, of Houston, is a provider of consumer credit services and related information to banks, mortgage companies, retail establishments, the auto industry and other users of credit information.
The unit owns credit files in 15 Midwestern and central U.S. states representing 20% of the U.S. population and is on track to generate about $230 million in sales and $100 million in operating income during the current fiscal year.
Atlanta-based Equifax since 1988 has had an affiliate arrangement with CSC Credit to process its data and sell the files nationally. The buyer in a statement said that bringing the affiliate in-house should help boost sales, with Equifax estimating that the unit would increase annual net operating revenue by $115 million, to $125 million, and Ebitda by $105 million, to $110 million.
"We have a long working history with CSC and believe the acquisition of these assets will be a catalyst for the long-term growth of our USCIS business unit," Equifax chairman and CEO Richard F. Smith said in a statement. "We will use a portion of any increased earnings for additional investments in growth initiatives and infrastructure across our businesses."
The deal is the second divestiture announced by Computer Sciences in recent weeks, part of a broader restructuring of the Falls Church, Va.-based information technology firm. Computer Sciences, which in October sold consulting and integration services assets in Italy to Dedagroup for an undisclosed sum, is focusing on managing networks for government and corporate customers.
Computer Sciences said it expects between $750 million and $800 million in after-tax proceeds from the sale, which will be used to repurchase shares, fund pension obligations and other general corporate purposes.
Company CEO Mike Lawrie in a statement said the deal "advances CSC's turnaround by reshaping our portfolio and enabling the company to focus on next-generation technology solutions and services."
The CSC Credit deal is subject to regulatory approval, and is expected to close before year's end. Equifax said it intends to fund the purchase using debt and available cash, noting that on Dec. 1 the company entered into a new $350 million, 364-day revolving credit facility with Bank of America NA, JPMorgan Chase Bank NA, SunTrust Bank and Wells Fargo Bank NA to supplement its existing $500 million senior revolving credit facility.
Barclays advised Computer Sciences on the deal.
John E. Sorkin joined Ropes & Gray LLP's mergers and acquisitions practice as a partner in New York. For other updates launch today's Movers & shakers slideshow.
David Marcus of The Deal, speaks with Andy West, Director at McKinsey & Company about the M&A landscape. More video