Donald Robert is ready to fly solo.
Robert, chief executive of Costa Mesa credit bureau Experian Group, is readying for a split from the company’s British parent, GUS PLC.
The move is designed to give Experian,one of the largest credit reporting and financial information companies with annual sales of more than $2 billion,its own identity and help it compete, according to Robert.
“We’ll have a clearer, undiluted story to tell,” said Robert, who oversees 12,000 employees in 28 countries.
Experian could have a market value of at least $10 billion following an initial public offering, according to analysts. That would put it among the top Orange County-based companies and one of the biggest offerings in the county’s history.
That is, if the headquarters stays in OC.
Robert is based here, but it’s not certain whether Experian would trade on a U.S. stock exchange and be based in Costa Mesa, or be listed on the London Stock Exchange and be based in the U.K.
“It’s not a slam-dunk decision,” Robert said.
A decision could come by year’s end but is more likely in 2006.
Speculation about an Experian spinoff began in earnest after the company said last year it was reviewing its “strategic” options.
In May, GUS said it planned to “separate” Experian, but didn’t offer more details.
The board at GUS is looking at how to spin it off, Robert said.
GUS, which runs the Argos and Homebase retail chains in Britain, plans to first split off Burberry Ltd., a move that is expected later this year.
GUS holds a 66% stake in Burberry, a high-end clothing designer and retailer.
“Strategically, there’s no reason to keep (Experian and GUS) together,” Robert said. “The businesses are distinctly different.”
Investors see Experian as a star at GUS with consistent double-digit growth that’s helped prop up its parent. Britain’s retail sector has struggled this year.
Robert insists that Experian has two headquarters. One is in Costa Mesa, where the company built its own facility to handle North American operations. The other is in Nottingham, England, which oversees operations in the rest of the world.
GUS named Robert chief executive of all of Experian’s operations in April. The de facto headquarters could be considered to be where the Portland, Ore., native is based,Costa Mesa. Robert also was named to GUS’s board.
Some observers believe Experian will put its headquarters in the country where it’s listed.
Richard Ratner, an analyst at Seymour Pierce in London, said the Experian unit is “well-known” in the U.K., and it makes sense for Experian to be listed there. GUS owns 100% of Experian, so most shareholders live in the U.K.
“Our parent company is a very prominent stock,” Robert said.
Other observers see a U.S. headquarters as more likely.
U.S. Competition
Many of its main competitors are based in the U.S., including credit reporting companies Equifax Inc. in Atlanta and TransUnion LLC in Chicago.
Alpharetta, Ga.-based credit scorer ChoicePoint Inc. also is a competitor.
Some 55% of Experian’s $2 billion in yearly revenue comes from North America, said Simon Proctor, an analyst with Charles Stanley in London.
“I would imagine it would have some form of an American listing,” Proctor said.
That could include a listing in London and American depositary receipts here, as with Cadbury Schweppes PLC and other British companies.
Another possibility: Robert may lead the company from the U.S. even if it’s based in Britain.
“We’re very comfortable with managing the company almost in a virtual sense,” he said.
Either way, company officials said there would be no effect on daily functions or workers in OC.
The company has averaged nearly 20% sales growth in the past few quarters, and expects to see growth of around 10% annually in the future, Robert said.
Experian has been expanding beyond Europe and North America to Brazil, Russia, India, China and Korea. It recently opened a headquarters for its Asian operations in Hong Kong.
The company also is pressing regulators in Beijing to let it open a private credit bureau in China that would allow automakers to monitor customers’ credit records, according to the Financial Times.
Another driver for growth: acquisitions. Experian isn’t shy about making them.
The company has bought nearly a dozen companies in the past two years. In late August, Experian announced two buys in a week when it picked up Omaha, Neb.-based Vente Inc., a supplier of online consumer research, and Carmel, Ind.-based Baker Hill Corp., which makes relationship management, credit origination and portfolio risk management software.
Experian is using acquisitions to diversify from its bread-and-butter credit operations. In April, the company paid $330 million for Santa Monica-based LowerMyBills.com, which directs users to deals on mortgage loans, auto loans and other expenses. It could pay another $50 million for LowerMyBills based on performance.
Expect more buys, Robert said.
“We will continue to invest in acquisitions and will continue do it in other parts of the world,” he said. “We have no plans to let up.”
Still, there have been some challenges.
In August, Experian paid $950,000 to settle a long-running dispute with the Federal Trade Commission over its Consumerinfo.com unit. Regulators said the company did not adequately disclose that consumers automatically would be signed up for a credit report monitoring service and charged $79.95 if they didn’t cancel within 30 days.
Experian officials said the problem was addressed about two years ago on the Web site, and the company wanted to move on.
Privacy Issues
Another challenge is keeping consumer information private. Competitors such as ChoicePoint have been rocked by cases of stolen customer data.
Experian has boosted training programs and policies to help combat possible data leaks, Robert said.
“We are extremely aware of our duty to protect safeguarded sensitive consumer data,” he said.
Meanwhile, Experian is considering building another 150,000-square-foot building at its Costa Mesa campus, where it employs about 1,200 people.
The company would like to move to Costa Mesa about 200 workers at its Irvine Experian Consumer Direct operation, which provides credit reports.
“We would like to get all our Orange County people onto this campus,” Robert said.
Robert looks ready to lead a “separated” Experian.
Recently, a photographer shot his picture in Costa Mesa at a large conference room with a huge circular table surrounded by plush chairs.
Robert suggested a caption for the picture: “Waiting for his board of directors.”
