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Bankrate to Buy Two Internet Data Providers for $40 Million

Posted on: Tuesday, 22 November 2005, 09:00 CST

By Jeff Ostrowski, The Palm Beach Post, Fla.

Nov. 22--Only four years after it languished on the dot-com deathwatch, online financial publisher Bankrate Inc. on Monday said it would drop $40 million on two deals that underscore its dramatic turnaround.

The acquisitions are driven by a boom in online advertising as lenders seek to reach consumers through the Internet. Bankrate President and Chief Executive Thomas Evans pointed to projections that the mortgage industry's online ad spending will soar from $2.5 billion this year to $5 billion in 2009.

Bankrate said it would pay $30 million in cash for rival MMIS/Interest.com of Villa Park, Ill., a deal that will triple Bankrate's reach as a provider of financial information to newspapers.

Interest.com runs a Web site similar to Bankrate.com and also sells charts listing mortgage and savings rates to the Los Angeles Times, Chicago Tribune and other newspapers; Bankrate already provides that sort of information to newspapers, including The Palm Beach Post.

"It makes us the dominant force in that industry," Evans said in a conference call with analysts.

The North Palm Beach-based company also said it would pay $10 million for FastFind of San Francisco, a deal that moves Bankrate into the fast-growing business of matching consumers with providers of mortgages and home-equity loans.

FastFind, known as a "lead aggregator," will let Bankrate make money from visitors to its site by selling their names and contact information as potential clients.

For the past year, Bankrate has sold ads on its site to lead aggregators E-Loan and LowerMyBills.com, who in turn sold thousands of names a month to lenders.

Evans said it was "frustrating" to have to turn over valuable names to other companies.

"They owned the customer, not us," Evans said.

He envisions ultimately selling mortgage leads not just to lenders but also to retailers such as Home Depot.

MMIS/Interest.com and FastFind are privately held. Both deals are set to close Nov. 30, Bankrate said.

Shares in Bankrate (Nasdaq: RATE) dipped 9 cents to $31.32 Monday, but the price remains well above Bankrate's all-time low of 19 cents a share in December 2000 -- a time when Bankrate ranked near the top of a Barron's list of likely-to-fail dot-coms.

Colin Gillis, an analyst at Adams Harkness in New York, lauded Evans for savvy deal-making with FastFind. He noted that credit bureau Experian Information Solutions earlier this year paid $330 million for LowerMyBills.com.

And, Gillis said, a boom in online advertising has created a "publisher's market" for companies such as Bankrate.

"There are more advertisements than pages available to put them on," Gillis said.

The deals will add 66 employees to Bankrate's staff of 125, and the acquisitions are expected to boost the company's revenue from $50 million this year to $78 million next year, Evans said.

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Copyright (c) 2005, The Palm Beach Post, Fla.

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Source: The Palm Beach Post

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