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Broadridge Poised to Acquire Bonaire

Zacks Equity Research

Broadridge Financial Solutions, Inc.(BR) is set to acquire a fee calculation, billing, and revenue and expense management solutions company – Bonaire Software Solutions, LLC.

The acquisition of Bonaire is part of the company’s strategy to build a portfolio of data-driven solutions for mutual fund, retirement and asset management firms – to help them grow their businesses, increase operational efficiency and minimize risks.

Bonairewill be a strategic fit for Broadridge, as the business models of both the companies are almost identical. Bonaire’s solutions would complement Broadridge's offerings for asset managers, wealth managers and mutual funds, strengthening its platform for the future.

At present, there is a rising demand from companies for innovative solutions to meet stringent regulations as they will be penalized otherwise. This acquisition will enhance Broadridge’s market credibility, as the automated compliance process offered by it will eliminate the risks involved in the manual process.

Companies have outsourced many of their businesses to Broadridge. Recently, it entered into a 10-year Master Services Agreement with Apex, under which the latter will outsource its securities processing and back office support services to Broadridge.

Moreover, companies such as Pension Worldwide Inc. (PNSNQ) have also outsourced much of their compliance and transaction activities to Broadridge. Given these factors, Broadridge’s growth prospects seem promising. 

Although acquisitions appear to be lucrative for the company, there is rising competition – with companies such as HD Supply and DST Systems Inc. (DST) creating considerable  pricing pressure.

Currently, Broadridge carries a Zacks Rank #3 (Hold).

Better performing stocks in the same sector include Portfolio Recovery (PRAA) and Sykes Entrp Inc. (SYKE), both of which have a Zacks Rank #1 (Strong Buy).

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