Fiserv, Inc., a leading provider of technology solutions, and CheckFree Corporation, a leading provider of financial e-commerce services and products, today announced that they have entered into a definitive agreement whereby Fiserv will acquire CheckFree in an all-cash transaction valued at approximately $4.4 billion. Under terms of the agreement, CheckFree shareholders will receive $48.00 in cash for each share of common stock.
CheckFree, a leader in online banking, electronic payments, and infrastructure and services, and Fiserv, a leader in information management services to the financial and insurance industries, have complementary technology, services and business models. Fiserv anticipates the combined organization will deliver a wider range of product and service offerings for customers, as well as provide opportunities for improved growth and enhanced efficiency, including the ability to bring new solutions to market faster.
CheckFree has leading positions in electronic billing and payment, online banking, investment management technology solutions, ACH payments and fraud and risk management, among others. Fiserv currently serves almost 6,000 core processing clients and all top 100 banks in the U.S. CheckFreeâs Electronic Commerce business serves 21 of the top 25 financial institutions in the U.S. and processes more than 1 billion transactions per year.
âCheckFreeâs industry-leading payment and Internet banking capabilities will significantly accelerate our strategic transformation, extending our service platform to the largest financial institutions,â said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. âThis combination allows us to deliver the best available solutions to all of our clients to enhance growth today, and into the future. An important objective of the transaction is to tightly integrate electronic bill payment and settlement capabilities with our core account processing and risk management solutions to create a unique value proposition unrivaled in the marketplace today.â
âBy joining our complementary technology and capabilities with Fiserv and its unparalleled footprint, this new combined entity will broaden Fiservâs offerings to customers worldwide,â said Pete Kight, CheckFree Chairman and Chief Executive Officer. âIn particular, it will significantly accelerate the delivery of next-generation services to financial institutions and their customers. CheckFreeâs broad range of offerings will also enable Fiserv to round out its ability to deliver solutions that address the challenges of an evolving U.S. payments landscape and help facilitate the growth of the managed accounts industry.â
In conjunction with the closing of the transaction, Kight will be employed by Fiserv and appointed to its board of directors.âPeteâs demonstrated results in building one of the worldâs leading payment and transaction processing companies are a testament to his energy, vision and strategic leadership,â said Donald F. Dillon, Fiserv Chairman. âWe will be thrilled to have him on our board.â
Fiserv expects to realize more than $100 million in annualized cost savings and more than $125 million in annualized revenue synergies. For 2008, the transaction is expected to be accretive to Fiservâs underlying cash earnings per share. The transaction is expected to be completed by December 31, 2007, subject to regulatory approvals,approval by the CheckFree shareholders and customary closing conditions. After closing, the combined company will have pro-forma revenue of about $6 billion, employ more than 27,000 associates world-wide and be the leading provider of technology processing solutions to banks and financial institutions.
âWe are impressed by the people of CheckFree. Their cultural commitment to clients is consistent with how we do business and this combination will create significant growth opportunities for all of our people,â said Yabuki.
CheckFree 2007 Preliminary Earnings Per Share CheckFree announced that, for its fiscal year ended June 30, 2007, it expects to report GAAP revenue in the range of $970.0 million to $973.0 million, and underlying revenue in the range of $993.0 million to $996.0 million. CheckFree expects GAAP earnings per share for fiscal 2007 to be in the range of $1.35 and $1.37, and underlying earnings per share for fiscal 2007 to be in the range of $1.87 to $1.89. The difference between CheckFree's expected GAAP and underlying revenue expectations is due to an $11.0 million charge for earned customer warrants and approximately $12.0 million in expected deferred revenue adjustments related to acquisitions. The difference between GAAP and underlying earnings expectations is due to expected amortization of acquisition-related intangible assets of approximately $63.5 million, acquisition-related integration costs of an estimated $7.0 million, the SFAS 123(R) impact of stock options issued prior to July 1, 2004 of approximately $1.6 million, an $11.0 million charge for earned customer warrants, and approximately $12.0 million in expected deferred revenue adjustments related to acquisitions, all net of related income tax benefits of approximately $28.0 million.
CheckFree plans to release its fiscal year 2007 earnings results on August 3, 2007, rather than August 9, 2007, as previously announced.Fiserv is being advised by Credit Suisse and Sullivan & Cromwell LLP. CheckFree is being advised by Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz.