Davis + Henderson To Buy Harland Financial Solutions For $1.2 Bln

Canada-based financial technology solutions provider Davis + Henderson Corp. (dh.to) said Tuesday that it has agreed to buy U.S.-based rival Harland Financial Solutions from parent company Harland Clarke Holdings Corp. for about $1.2 billion in cash.

Lake Mary, Florida-based Harland Financial Solutions or HFS is a provider of strategic technology, including lending and compliance, core banking, and channel management technology solutions to U.S. banks, credit unions, and mortgage companies. The transaction is expected to close on or about August 19, 2013.

Gerrard Schmid, CEO of D+H said, "Acquiring HFS fully aligns with D+H's FinTech vision and our objective of growing our technology capabilities and value proposition in the service of banks and credit unions."

D+H noted the acquisition will bolster its presence as a North American core banking technology and lending compliance solutions provider. The acquisition also provides D+H with 5,400 U.S. bank and credit union clients, bringing its total client base to more than 6,200 financial institutions after accounting for shared relationships.

The merger creates a company with pro forma 2012 combined annual revenues of about C$1.1 billion, of which about 90 percent is recurring in nature, and pro forma 2012 combined adjusted net income of C$123.4 million.

D+H expects the acquisition to be immediately accretive to its adjusted net income per share and generate high single-digit accretion in 2014.

In conjunction with the acquisition, D+H has entered into a deal with a syndicate of underwriters co-led by Scotiabank, RBC Capital Markets and CIBC to sell C$400.18 million of subscription receipts and C$200 million of 6.00 percent extendible convertible unsecured subordinated debentures on a bought deal basis for gross proceeds of about C$600 million.

In addition, a syndicate of existing and new private placement lenders has offered to provide funding to D+H for the acquisition. D+H noted that as these transactions may not be completed by the time of acquisition closing, it has obtained a fully committed bridge facility for the full purchase price plus transaction expenses required to close the acquisition.

On the Toronto stock exchange, DH.TO closed Tuesday's trading at C$22.98, up C$0.13 or 0.57 percent on a volume of 104,081 shares.

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