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Private equity investor Broadridge Financial Solutions Inc (NYSE: BR) inked an agreement to acquire Itiviti Holding AB for $2.5 billion (€2.143 billion) from Nordic Capital. Itiviti Holding AB is a trading and connectivity technology provider to the capital markets industry.
Itiviti's subscription-like revenue model translated into a recurring revenue of €210 million in CY20.
Itiviti will become part of Broadridge's Global Technology and Operations segment. CEO Rob Mackay will remain with the company to drive future growth. The acquisition is estimated to be EPS accretive in the first full year.
Itiviti deal is estimated to contribute 2.5-3 points to Broadridge's recurring revenue CAGR and 2 points to its EPS CAGR over FY20-2023. Consequently, the company considers itself well-positioned to accomplish the higher end of the three-year 7-9% recurring revenue growth and 8-12% EPS growth CAGR targets announced during the December 2020 Investor Day.
"By extending our capabilities into the front office and deepening our multi-asset class solutions, Itiviti significantly strengthens our Capital Markets franchise and better enables Broadridge to help financial institutions adapt to a rapidly evolving marketplace. Itiviti's well-developed footprint in APAC and EMEA will increase our scale outside North America and strengthen our ability to serve our global clients," said Broadridge CEO Tim Gokey.
Broadridge will finance the acquisition through a new $2.55 billion term credit agreement. It held cash and cash equivalents worth $366 million as of December 31, 2020.
Price action: Broadridge's share prices closed higher by 3.51% at $153.44 on Friday.
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