Fiserv to Acquire CheckFree for $4.4 Billion

Information management system provider Fiserv announced Thursday it will acquire electronic payment processing company CheckFree for $48 per share in cash, or $4.4 billion -- a 30% premium to CheckFree's Wednesday close. The combination will allow Fiserv to incorporate CheckFree's bill-payment services into its own account-processing and risk-management services. The combined company is expected to have revenue of approximately $6 billion and to add to Fiserv's earnings in 2008. Fiserv anticipates the combination will result in cost savings of over $100 million and $125 million in revenue synergies. "For people who pay bills online, in most cases they're using CheckFree's capabilities at their bank sites,'' said Fiserv CEO Jeffery Yabuki. "That's the premium service and we think it's a huge growth engine for the future." The transaction follows the purchase by Bank of New York of Mellon Financial for approximately $16.5 billion in stock and the acquisition by State Street Corp. of Investors Financial Services for $4.2 billion. CheckFree recently bought payment software consultant Carreker and online banking software company Corillian. In related news, CheckFree announced Thursday that it is projecting EPS for fiscal 2007 (ended June 30) of $1.35-1.37 and adjusted EPS of $1.87-1.89, ahead of analyst forecasts of $1.84.

Sources: Press release, MarketWatch, Bloomberg, Wall Street Journal, Dow Jones
Commentary: Fiserv, Oracle, SAP and Financial Services IT • Fiserv Showing Strong Growth
Stocks/ETFs to watch: FISV, CKFR. Competitors: FIS, TSS, MA, ORCC. ETFs: BHH, PSJ, PWO
Earnings call transcripts: Fiserv Q2 2007, CheckFree F3Q07

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