Fiserv to Sell Majority Interest in its Insurance Business
Fiserv, Inc. (NASDAQ: FISV), a Brookfield, Wis.-based provider of information technology services to the financial and insurance industries worldwide, announced yesterday it has signed a definitive agreement with Trident IV, a private equity fund managed by Stone Point Capital LLC, in which Trident will invest approximately $205 million in equity and $335 million in debt to acquire a 51 percent majority interest in Fiserv's insurance businesses.
Fiserv expects to receive approximately $515 million in net after-tax proceeds and to retain a 49 percent equity interest in Fiserv Insurance Solutions. The transaction is anticipated to close this month, subject to regulatory approval and other customary closing conditions. The transaction will impact nearly all of Fiserv's Insurance segment. The current management team and employee base will continue with the company, which will be known as Fiserv Insurance Solutions Inc.
"Stone Point Capital brings a proven track record of insurance industry success that we believe will accelerate the growth opportunities for Fiserv Insurance Solutions and its clients," said Jeffery Yabuki, Fiserv president and CEO. "Within Fiserv, we are able to free up capital, maintain an interest in Fiserv Insurance Solutions that should increase in value, and intensify our focus on delivering products and services within the broad financial services and payments landscape." Stone Point and its predecessor operations have a 20-year history of successful investing in the global insurance and financial services industries, primarily targeting investments in the insurance and financial services industries including insurance underwriting, distribution and services, benefits and health care, asset management and retirement savings, and banking and depository institutions.
Fiserv said it expects a slight 2008 earnings dilution of $0.02 to $0.04 per share or approximately 1 percent depending upon reinvestment of the net proceeds. In connection with the sale, Fiserv also re-affirmed its 2008 adjusted earnings per share guidance of $3.28 to $3.40 from continuing operations. Fiserv expects the transaction to be accretive to its long-term revenue, earnings, and margin growth rates, it said. Upon closing the transaction, Fiserv will no longer consolidate revenue and expenses from Fiserv Insurance Solutions. Due to the sale of its majority interest, the company will report its 49 percent share of net earnings in Fiserv Insurance Solutions on a single income statement line item, which is anticipated to begin in Fiserv's third quarter earnings announcement.
In a related action, the Fiserv Board of Directors authorized the repurchase of up to an additional 10 million shares of Fiserv co