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Once-Troubled ChoicePoint Purchased For $3.6 Billion

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By HARRY R. WEBER, The Associated Press

Published: February 22, 2008

ATLANTA - ChoicePoint, a 1997 spinoff of credit agency Equifax, is being acquired by the parent of LexisNexis in a cash deal worth $3.6 billion, a major premium for a company that weathered an embarrassing breach of its database, federal investigations and a stock-trading probe of its top two executives.

The deal combines ChoicePoint's data and analytics assets with LexisNexis' technology, a marriage that will strengthen the combined entity's ability to meet growing demand for their services, especially in the insurance field.

The purchase price amounts to $50 a share, a 49 percent premium to Alpharetta, Ga.-based ChoicePoint's closing stock price of $33.66 on Wednesday. ChoicePoint had 71.5 million shares outstanding as of its last reporting date of Oct. 31, 2007.

Reed Elsevier PLC, a London-based educational publisher and parent of the LexisNexis information service, also will assume roughly $500 million to $600 million in ChoicePoint debt, the company said Thursday. Company spokespersons differed on the exact debt figure.

ChoicePoint, which collects, sells access to and analyzes the personal information of consumers, will be combined with LexisNexis' risk group. The combined group will remain based at ChoicePoint's suburban Atlanta headquarters, though a name has yet to be determined.

Personnel decisions, including what role ChoicePoint Chief Executive Officer Derek Smith will play in the group, also have not been determined, said Jim Peck, the chief of LexisNexis' risk group.

There will be staff cuts, though the breadth is not known, Peck said. ChoicePoint employs about 5,000 staff. LexisNexis' risk group has about 1,000.

ChoicePoint shares soared $14.55, more than 43 percent, to $48.21 in afternoon trading Thursday.

Peck said it is premature to discuss whether any ChoicePoint services will be exited once the deal is completed. He said LexisNexis was particularly interested in ChoicePoint's insurance sector business.

The acquisition, subject to ChoicePoint shareholder and regulatory approval, is expected to close this summer.

ChoicePoint did not return calls Thursday seeking comment. One spokesman sent an e-mail referring all inquiries to Reed Elsevier officials.

ChoicePoint disclosed in February 2005 that thieves posing as small business customers gained access to the company's database, possibly compromising the personal information of 163,000 Americans.

In January 2006, the company agreed to pay $15 million to settle Federal Trade Commission charges that the data warehouse's security and record-handling procedures violated consumers' privacy rights.

The company also adopted stronger security measures and launched public education campaigns about identity theft.

Last month, ChoicePoint said the Securities and Exchange Commission closed its investigation into stock sales involving the company's top two executives without recommending any charges.

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