CHICAGO - TransUnion (NYSE:TRU), a global information and insights company, has announced plans to significantly increase its ownership in Trans Union de Mexico, S.A., S.I.C., the consumer credit subsidiary of Mexico’s leading credit bureau, Buró de Crédito. The deal involves purchasing an additional 68% stake for about MXN 11.5 billion ($560 million), which will raise TransUnion's share to roughly 94%.
The acquisition, which excludes Buró de Crédito's commercial credit business, is part of TransUnion's strategy to enhance financial inclusion and support Mexico's digital transformation. President and CEO Chris Cartwright emphasized the role of credit bureaus in fostering financial inclusion and the opportunity to deliver advanced technology and solutions to the Mexican market.
Mexico, with its large economy and growing middle class, presents a significant opportunity for consumer credit expansion. The country has seen an increase in credit penetration over the past decade, signaling potential for further growth.
TransUnion, which operates in over 30 countries, plans to integrate the consumer credit business into its global operating model, aiming to strengthen its services in Mexico. The company anticipates additional hiring in Mexico to support this expansion and enhance regional capabilities.
Carlos Valencia, Regional President of TransUnion Latin America, highlighted the acquisition's potential to position TransUnion as the largest credit bureau in Spanish-speaking Latin America. The company intends to introduce trended and alternative credit data, fraud mitigation solutions, and consumer engagement tools, and expand into sectors like FinTech and insurance.
The transaction, expected to close by the end of 2025 pending regulatory approvals, is projected to generate about $145 million in revenue and $70 million in Adjusted EBITDA for 2024. The acquisition is anticipated to be accretive to Adjusted Diluted Earnings per Share in the first year of majority ownership. This expansion aligns with TransUnion's growth trajectory, with InvestingPro analysis showing the company's current EBITDA at $1.23 billion and a healthy current ratio of 1.68, indicating strong operational efficiency. For detailed insights and additional metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Funding for the acquisition will come from a mix of debt and cash on hand. TransUnion held a conference call and webcast to discuss the transaction details and forward-looking information, with a replay available on their website. The company's stock has demonstrated strong momentum with a 36.86% return over the past year, and analysts maintain a positive outlook. InvestingPro subscribers can access over 12 additional ProTips and detailed financial metrics to better evaluate this strategic expansion.
This expansion is based on a press release statement and is subject to regulatory approvals and customary closing conditions.
In other recent news, TransUnion's Q3 earnings and revenue results have shown robust growth, with a 12% increase in revenue and a significant 17% growth in U.S. financial services. Analyst firms Baird and Stifel have responded positively, raising TransUnion's stock target to $130 and $120 respectively, while Jefferies maintained a Buy rating but lowered the stock's price target from $125.00 to $115.00. B.Riley, however, has maintained a Neutral rating on TransUnion's stock.
These developments follow a strategic financial maneuver by TransUnion, which involved refinancing a substantial portion of its debt. The company has established new term loans totaling approximately $1.885 billion and refinanced part of its existing loans.
In addition to these financial highlights, TransUnion announced that William P. Bosworth, a member of its Board of Directors, will resign at the end of 2024, and the Board will reduce its size from 11 to 10 members starting 2025. Executive Vice President and Chief Global Solutions Officer, Timothy J. Martin, plans to retire in September 2026.
TransUnion's ongoing transformation program is expected to yield $200 million in free cash flow benefits by 2026, with capital expenditures projected to decrease to 8% of revenues for 2024 and 2025. These recent developments reflect TransUnion's commitment to its long-term financial obligations and operational efficiency.
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