Under terms of the deal, CheckFree shareholders will receive $48.00 in cash for each share of common stock. This is 30% higher than the stock's closing price of $36.83 yesterday.

Founded in 1981, CheckFree provides online banking, electronic payments and infrastructure services to financial firms worldwide. The firm's investment services unit provides a broad range of investment management systems and outsourced services to financial services organisations.

The Georgia-based vendor has also built its business up with a number of recent acquisition including financial IT and consultancy firm Carreker, Internet banking systems vendor Corillian and most recently Upstream Technologies, a Boston-based provider of investment decision support and order management tools.

Jeffery Yabuki, president and CEO of Fiserv, says CheckFree's payment and Internet banking capabilities will "significantly accelerate our strategic transformation, extending our service platform to the largest financial institutions".

"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 unrivalled in the marketplace today," adds Yabuki.

Fiserv says it expects to realise more than $100 million in annualised cost savings and more than $125 million in annualised revenue synergies following the combination. For 2008, the transaction is expected to add to Fiserv's underlying cash earnings.

Following closing of the transaction CheckFree chairman and CEO Pete Kight will be employed by Fiserv and appointed to the board of directors.

The deal is expected to close by 31 December 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 and employ more than 27,000 associates worldwide, says Fiserv.