MADISON, Wis. — While Fiserv is touting organic growth, it certainly is sticking to its acquisition knitting.
The technology giant announced plans to acquire CheckFree, the largest electronic bill pay and presentment firm. The all-cash deal is valued at $4 billion.
The merger marries Fiserv's strength in core processing with CheckFree's electronic commerce business. Fiserv has 6,000 core processing clients and CheckFree processes more than one billion transactions a year on the payments side. It has 21 of the top 25 financial institutions in its client base.
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"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 by creating a unique value proposition unrivaled in the marketplace today," said Fiserv CEO Jeff Yabuki.
Fiserv expects to see $100 million in annual cost savings and $125 million in additional annual revenue synergies.
Fiserv does have competing products with CheckFree, specifically Paytraxx, its electronic bill pay product. Paytraxx has gained traction, with 91 new financials signing on in 2006, bringing its total base to almost 500. There are 112 credit unions using the product.
Scott Butler, Fiserv division president for the depository institutions group, said this deal will help Fiserv make bill pay integration even tighter and bring economies of scale efficiencies.
"Our credit unions are looking for opportunities to expand business and increase efficiency. On the payments side, Check free is the largest player in the market. It has a lot of capabilities our clients will benefit from," said Butler. He cited credit unions being able to leverage CheckFree's commercial solutions as they get deeper into business services and the non-interest income opportunity payments provide.
Once this deal is closed, Fiserv will grow to a $6 billion company with 27,000 employees. Fiserv is the dominant core processor in the credit union space with seven core processing subsidiaries.
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