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CheckFree #1 – Fiserv to Acquire CheckFree


Over the last year, we noticed two key acquisitions in the EIPP and Payments space, these being purchase of Xign by JP Morgan and purchase of Harbor Payments by American Express. Recently, I had lunch with a US Company looking for an acquisition in the UK. And now CheckFree is to be acquired by Fiserv. This clearly shows the importance and the increasing maturity of this segment. So according to the press release:

Fiserv, Inc. (NASDAQ: FISV) will acquire CheckFree Corporation (NASDAQ: CKFR) in an all-cash transaction valued at approximately $4.4 billion, and the CheckFree shareholders will receive $48.00 in cash for each of common stock.  

CheckFree is not strictly an EIPP solutions provider, but a significant player in the Payments space from provision of ACH solutions to transaction process management. On the other hand, Fiserv provides information management services to the financial and insurance industries. The combined organisation is expected to deliver wider range of products and services with the ability to bring new solutions to the market faster.

Few facts from the press release:

  1. Fiserv serves almost 6,000 clients and all top 100 banks in the USA.
  2. CheckFree serves 21 of the top 25 financial institutions in the USA and process more than 1 billion transactions per year.

According to Jeffery Yabuki, President and Chief Executive Officer of Fiserv:

“CheckFree’s industry-leading payment and Internet banking capabilities will significantly accelerate our strategic transformation, extending our service platform to the largest financial institutions. This 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.”

According to Pete Kight, CheckFree Chairman and Chief Executive Officer:

“By joining our complementary technology and capabilities with Fiserv and its unparalleled footprint, this new combined entity will broaden Fiserv’s offerings to customers worldwide. In particular, it will significantly accelerate the delivery of next-generation services to financial institutions and their customers. CheckFree’s 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.”

Kight will join Fiserv Board of directors. So what are the synergies of this transaction and the justifications?

  1. More than $100 million in annualized cost savings.
  2. More than $125 million in annualized revenue synergies.
  3. Pro-forma revenues of $6 billion

Who would be the next to be acquired? Could this be a UK company? My views about the “Significant 4”: May be on another day.

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