Reed Elsevier, the Anglo-Dutch publishing giant, said yesterday it had snapped up the US data services group Seisint in a deal worth $775m (£417m).
Reed said Seisint - which provides details and analysis of public records, enabling companies and the US government to gather information about US citizens - would be subsumed by its wholly owned subsidiary Lexis Nexis, Reed's legal and government information arm. The group said the fit between the two businesses was "very strong", and would provide Reed with a firm foothold in the US risk management market.
In a statement yesterday, the group said the sector was already worth £5bn, and has been "growing at 7 to 9 per cent per annum over the past 10 years, and has highly attractive future growth prospects". It added that Seisint is projected to grow revenues by more than 40 per cent this year, and that the business would contribute to Reed's earnings within the first year of its integration.
Analysts gave the deal a luke-warm welcome, saying that at $775m, equivalent to 16 times earnings, Reed had paid a high price for the firm. The sector average is about 10 times earnings. However, they added that the deal could prove to be a good move for the company if its strong growth continues.
The acquisition is Reed's largest since its $5.6bn purchase of Harcourt General, the schoolbook publisher, in 2001.
Reed's chief executive, Andrew Prozes, said: "We are excited by the opportunities presented by this acquisition. Seisint is a strongly growing business and will significantly enhance Lexis Nexis' ability to offer the most powerful, fastest, easiest-to-use solutions in the rapidly growing risk-management sector. The acquisition will accelerate Lexis Nexis' future revenue and profit growth."
Shares in Reed - which publishes textbooks and magazines, including the US film publicationVariety - fell by 0.8 per cent to 495p in early trading, recovering to close 1p higher at 500p.
Seisint is a private Florida-based firm owned by a consortium of venture capitalists led by Spectrum Equity Partners. It is best known for its development of a US anti-terrorist information system, created with the backing of the US government, known as The Matrix.
The system, which combines Seisint's commercial databases with US federal law enforcement records, came under fire from civil liberties groups earlier this year, who said the system could be abused, aiding the arrests of innocent people.