VED Veda Group Fpo (delisted)

By Robb M. Stewart 

MELBOURNE, Australia--Consumer-credit reporting agency Equifax Inc. is seeking to break into the Australian market, pitching a takeover offer for one of the country's biggest credit-reference providers valued at about 2.28 billion Australian dollars (US$1.64 billion).

Equifax on Friday said it had made a nonbinding offer for Sydney-based Veda Group Ltd.

If a takeover is successful, it would give Equifax a substantial foothold in the region at a time when Australia is adopting a comprehensive credit reporting regime that brings it into line with most of the developed world, including many of the countries where Equifax already operates.

Veda earlier said it had received a cash offer from Equifax to buy the company at A$2.70 a share. The indicative offer represents a 35% premium to Veda's closing share price Thursday.

Veda's shares, which had fallen about 13% in 2015 ahead of the approach, rallied almost 30% in intraday trading Friday.

"Veda is a strategic asset," said Ed Prendergast, a portfolio manager at Pengana Capital in Melbourne, which owns shares in the Australian company.

Equifax has no meaningful presence in Australia or New Zealand, Mr. Prendergast said, adding that for it to build a business there from scratch would be costly and would take it many years to build up the necessary credit data to be considered a major rival.

Veda holds credit information on about 20 million individuals and 5.7 million businesses in Australia and New Zealand.

The Atlanta-based company in a statement said the proposal to buy Veda was financially compelling, and consistent with its strategic focus to expand into attractive new markets.

Equifax ranks among the market leading credit data and analytics providers in the U.S., Brazil, Canada and more than a dozen other countries. In early 2014 it bought U.K.-based debt management software company TDX Group, which has a regional office in Sydney.

Veda said its board would evaluate the offer, although there was no certainty it would result in a firm bid or that the terms would be acceptable.

Any offer is subject to conditions including due diligence and approval from regulators including Australia's Foreign Investment Review Board, which advises the government on foreign takeovers, it said.

The offer comes as Australia adopts comprehensive credit reporting, an effort to expand credit-history sharing under a voluntary reporting system adopted by the financial industry. Analysts have said the system, which is expected to take several years to roll out fully, promises a lift in revenue for companies such as Veda since it will open up additional information about the accounts individuals have and how well they meet repayments.

Veda was floated on the Australian stock exchange in late 2013 by Pacific Equity Partners, which led a takeover of the company in 2007. The private-equity firm in February moved to sell its remaining shares in Veda.

The company reported a net profit of A$78.4 million on revenue of A$338.8 million in the year through June.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

September 18, 2015 02:22 ET (06:22 GMT)

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