CoreLogic Inc.’s proposed $661 million acquisition of three data and analytics businesses is getting some additional regulatory scrutiny.
The Irvine-based real estate data specialist said last week that the U.S. Federal Trade Commission has requested additional information pertaining to its planned purchase of Marshall & Swift/Boeckh, DataQuick Information Systems, and the credit and flood-services unit of DataQuick Lender Solutions.
A reason for the FTC’s so-called “second request” for additional information and documentary material related to the purchase was not disclosed. Antitrust laws require mergers above a certain monetary threshold to submit the deals for review by the FTC and the U.S. Department of Justice.
The three companies are being bought from Fort Worth, Texas-based TPG Capital’s Decision Insight Information Group.
Second requests can be issued if the FTC is concerned that a merger or acquisition could significantly reduce competition in a given sector of business. Merger and acquisition lawyers note, however, that a number of other reasons—some highly complicated, others less so—could trigger the request.
“It’s somewhat more problematic (for CoreLogic)—they’ll have to tread more carefully” while dealing with the FTC going forward, said a local attorney who is not involved in the deal.
Trade industry reports suggest that less than 5% of mergers requiring the FTC’s sign-off receive second requests.
CoreLogic said in a filing with the Securities and Exchange Commission that it “has been working, and will continue to work, cooperatively with the FTC.”
The deal for the companies would be the largest acquisition to date for CoreLogic, a property information, analytics and services provider that primarily serves the real estate and mortgage industries.
CoreLogic was spun off from Santa Ana-based title insurance company First American Financial Corp. in 2010. It currently has a market value of nearly $2.5 billion.
Delay Likely
At the least, the second request appears likely to push back the planned acquisition’s closing, perhaps until early next year. The deals were announced in early July, with CoreLogic pegging a close by the end of September.
A report this year in the Antitrust Law Journal estimated that, on average, FTC second requests add about five months to the waiting periods for proposed acquisitions before they close.
The same report noted that a high percentage of transactions subject to a second request result in some changes to deals, or even terminations, in light of antitrust concerns.
The review request marks the second time the FTC has investigated CoreLogic in the past year.
CoreLogic was one of nine data brokerage companies FTC queried in December about how they collect and use data about consumers.
The agency said at the time that it would use the information to study privacy practices in the data broker industry.
There has been no further word from the federal agency on any study.
Growth Plan
The planned acquisitions currently under review are part of CoreLogic’s strategy to grow its data and analytics business to make up more than half of its total revenue over the next three years.
CoreLogic’s mortgage origination services division currently is the largest source of revenue for the company.
The company had $427 million in revenue for the second quarter, a nearly 10% increase from year-ago levels. About 40% of that revenue came from its data and analytics division, while an additional 43% came from the mortgage origination services division.
Milwaukee-based Marshall & Swift/Boeckh provides information on replacement costs for residential and commercial property for the insurance industry, while La Jolla-based DataQuick is a property data and analytics information company.
The acquisitions would more than double the company’s property and casualty insurance revenues, according to CoreLogic.
