LexisNexis Parent Set to Buy ChoicePoint
Friday, February 22, 2008
Publishing company Reed Elsevier, owner of the LexisNexis Group, is seeking to acquire commercial data broker ChoicePoint in a $4.1 billion cash deal that would create a global information-gathering powerhouse that would collect and analyze billions of records about who people are, where they live and with whom, and what they own.
With customers including government agencies, insurance companies, banks, rental apartments, corporate personnel offices and private investigators, the combined company's reach would extend from national security offices to the living rooms of ordinary Americans.
Both companies have played key roles in law enforcement, homeland security and intelligence. Both have also had identity-theft and security problems.
The deal, announced yesterday by Reed Elsevier, which is based in London, is a bid to increase the company's risk-management business. It comes at a time of exploding demand for ways to establish identity, discern fraud, and detect criminal and other threats by sorting through electronic records. Companies like ChoicePoint and Reed Elsevier seek to amass vast amounts of data and to analyze the information relevant to companies and government agencies.
"We just think it's a logical next step in the use of our capabilities," said James Peck, chief executive of LexisNexis Risk and Information Analytics Group, the division that would acquire ChoicePoint.
The proposed acquisition could have important, if difficult to discern, implications for Americans, whose personal information has become more scrutinized than ever before by information companies and corporations for marketing and security.
LexisNexis and ChoicePoint flourished over the past decade, a time when computing power soared and methods of gathering data became more sophisticated. But they have different strengths, and a combined company would give them a deeper look into American homes and a combined influence on processes as varied as national-security probes, insurance claims and job applications.
"Increasingly, this is less about what big business knows and more about how business uses information to make decisions about consumers," said Marc Rotenberg, executive director of the Electronic Privacy Information Center. "Both of these companies are having an increasing say over the opportunities that are available to consumers as well as to decisions that restrict individuals."
Since it began in 1997 as a reseller of credit data, ChoicePoint, headquartered in Alpharetta, Ga., has bought dozens of companies to become an all-purpose data broker. In recent years, the company has focused on refining data with analytical software. With a few clicks of a mouse, ChoicePoint's law enforcement, government and corporate customers can access information about personal holdings and activities.
"In a single report, ChoicePoint provides not only comprehensive data on the target of an inquiry, but also on associates, relatives, assets, affiliated companies, and neighbors, information which no other vendor offers in the same concise format," according to documents describing a 2007 contract with the Department of Energy.
ChoicePoint maintains the most extensive repository of insurance information obtained from claims applications, and it has developed systems that analyze that data to judge whether companies should offer a customer coverage or pay claims. The system, called the Comprehensive Loss Underwriting Exchange, receives data from almost every insurer about automobile and homeowners coverage.
LexisNexis, known for its legal and media services, also manages records about U.S. adults. The Risk and Information Analytics Group focuses on helping government, police and corporate customers peer into individuals' details to judge them for risk.