The U.K.'s Experian plc said Wednesday it will pay $850 million for Passport Health Communications Inc., a Franklin, Tenn., software maker.
Experian, which is best known as a provider of consumer credit-risk information, is buying the business from investors led by Spectrum Equity Investors LP and Great Hill Partners. The firms acquired a majority stake in the target in 2008 through a $232 million recapitalization which relegated Primus Capital to a minority shareholder.
Experian said the purchase of Passport Health will make it the leading U.S. maker of healthcare payment software, a market the London company entered five years ago with the $90 million acquisition of SearchAmerica Inc.
Experian CEO Don Robert said in a statement that the company's U.S. healthcare payment software business is growing strongly.
"With our newly combined product range, we will offer our clients in the U.S. healthcare industry a competitive one-stop shop to manage risk and to satisfy their payments requirements," he added.
Founded in 1996, Passport Health expects 2013 revenue of $121 million and Ebit of $30 million. Experian said it expects Passport Health's revenue to rise to $145 million in 2014, with Ebit margins in the high 20s. On completion of the purchase, Passport should immediately boost its own earnings, Experian said.
The deal will double Experian's healthcare payments products to 28, increase the number of U.S. hospitals it serves to nearly 3,000 from about 500 and boost the number of other healthcare providers that buy its services to more than 9,000 from 350.
Nevertheless, Experian shares in London fell sharply Thursday on news the Passport Health purchase means it will be suspending a $500 million share buyback program. The stock was down 6.2%, at 1,185 pence, by midafternoon, giving the company a market value of just under £11.9 billion ($19.2 billion).
The takeover agreement comes a month after Experian agreed to buy fraud-protection technology provider 41st Parameter Inc., of Scottsdale, Ariz., for up to $324 million.
Experian said Wednesday that first-half revenue climbed 3%, to $5.2 billion, with pretax profit up 2%, at $573 million.
The selling shareholders couldn't immediately be reached for comment on the Passport Health disposal.
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The New York City region has a high level of energy demand so the process is expected to be competitive. The sale price is estimated to be in the $500 million to $1 billion range. More video