Experian, a global information services company, is to acquire The 41st Parameter, Inc, a provider of fraud detection services, based in the US. The aggregate purchase price for all outstanding stock, stock options and warrants of 41st Parameter is US$324m, of which US$14m is subject to limited, two-year earn-out provisions, and will be funded from Experian’s existing cash resources. The transaction is subject to customary closing conditions.
For the year ending 31 December 2013, Experian expects 41st Parameter to deliver approximately US$26m of revenue, of which over 95% is booked and contracted. Revenues are licence-based and are recognised over the life of the contract, which is typically 2-3 years in duration. Client renewal rates exceed 95%.
Since incorporation, 41st Parameter has experienced strong growth, with compound annual growth in revenue over the past two years of over 40%. The contracted nature of the business model provides good forward visibility, and Experian expects to sustain growth in line with historic rates over the next twelve months. The acquisition is expected to be broadly EPS neutral in the year ending 31 March 2014.
Incorporated in 2004, 41st Parameter products use device identification to prevent fraud. Clients use 41st Parameter’s products to enable consumers to complete transactions on the web quickly and securely, reducing fraud losses while simultaneously authenticating consumers with minimal intrusion. Clients also use 41st Parameter products to enhance internal operational efficiency by reducing the number of false detections of potential fraud. Its clients include financial institutions, travel web sites, eCommerce merchants and customers in the digital media segment.
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Both companies are amongst the earliest gaming companies in the world. Com2uS is the older of the two, being founded in 1998. Gamevil was founded in 2000. Last year Gamevil reported full-year revenues of KRW 70.2 billion ($65.5 million). Com2uS reported KRW 76.9 billion ($71.8 million). Both companies operate out of South Korea.
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