Experian halts share buyback after $850 mln acquisition

* Shares down 6.6 percent

* Agrees to buy Passport Health Communications

* Bank of America Merrill Lynch downgrades stock

By Matt Scuffham

LONDON, Nov 5 (Reuters) - British credit data provider Experian (Other OTC: EXPGF - news) said it would suspend a $500 million share buy-back programme after agreeing to buy a U.S. healthcare data firm for $850 million, sending its shares lower on Wednesday.

Experian's acquisition of Passport Health Communications follows its $324 million deal to buy U.S. fraud detection firm, 41st Parameter, last month.

The British company first entered the U.S. healthcare payments market five years ago and has steadily expanded its position through investments and acquisitions.

Experian had also spent $322 million on buying back shares from investors at the end of September, having committed in May to buying back half a billion dollars worth in the next 12 months.

The company, best known for running consumer credit checks for banks, landlords and retailers, said it would stop returning money to shareholders via the buyback following its latest acquisition.

"There's a little bit left to go but it doesn't make sense to continue, Chief Executive Don Robert said.

However Robert said the group planned to continue to increase its dividend payouts to shareholders. The group is paying an interim dividend of 11.5 cents per share, up 7 percent.

Experian reported a 2 percent rise in first-half pretax profit to $573 million. Revenue from continuing businesses rose 6 percent.

Robert said he expects organic revenue growth to be in a similar range as in the first half.

Shares in Experian, which have risen by 28 percent since the start of the year, were down 6.6 percent at 0930 GMT.

Bank of America Merrill Lynch downgraded the stock to "neutral" from "buy", citing the stock's high valuation and disappointment over its rate of organic growth.

"Investors may also question the shift in capital allocation to more expensive M&A," it said.

Experian said it would fund the acquisition of Passport Health Communications with its existing debt facilities.