US e-payments vendor CheckFree has signed a definitive agreement to acquire troubled financial IT and consultancy firm Carreker Corporation for a total of $206 million.
Under the terms of the agreement, Atlanta-based CheckFree will pay $8.05 per share for Carreker - a five per cent premium of the stock's closing price of $7.64 on Nasdaq on Friday.
Carreker was put on the block in June last year after stakeholders at Chapman Capital and Bryant Riley called for the Dallas-based vendor to put itself up for sale.
Company chairman and CEO John Carreker says CheckFree's proposed acquisition "is the positive outcome of the strategic alternatives review process that has been underway at Carreker for the past year".
The vendor has struggled over the past two years after sales dried up and it was forced to cut its workforce in 2005. In December the firm reported an improvement, with revenue of $28.3 million and a net loss of $89,000 for the third quarter of 2006, compared to revenue of $28.8 million and net income of $961,000, or $0.04 per share, for the Q2 2006. But Carreker said full year revenue for 2006 is expected to be relatively flat, compared to fiscal 2005, albeit with improved profitability.
CheckFree says the acquisition will expand its software business and consulting expertise and combine its payments processing services with Carreker's expertise in cheque conversion. As a result, the combined organisation will be able to convert paper cheques into electronic items at the earliest possible points in the payments process – whether at the bank branch, corporate back office or lockbox. Having one provider for these and other capabilities will provide strong value to financial institutions and corporate customers, says CheckFree.
The transaction is expected to be "modestly dilutive" to earnings in the current fiscal year (ending June 30, 2007) and in fiscal 2008.
Commenting on the acquisition, Pete Kight, CheckFree chairman and CEO, says: "This combination will enable financial institutions and corporations to address a range of challenges, from payments convergence and more complex client requirements, to the need for operational efficiency gains and regulatory compliance."
The proposed deal, which is subject to regulatory review, Carreker shareholder approval and other closing conditions, is expected to close by 31 March 2007.