The transaction is expected to be accretive on 2001 earnings, excluding merger costs, and is expected to close in the second quarter of 2001 after regulatory review, necessary approvals, routine closing conditions and the completion of financing for which Carreker has arranged a commitment.
Check Solutions, headquartered in Memphis, Tenn., is a privately held company jointly owned in a partnership between IBM Corporation (NYSE: IBM) and First Tennessee Bank, principal banking subsidiary of First Tennessee National Corporation (NYSE: FTN). The company has served the payment-processing sector of the financial industry since 1981.
As part of Carreker, Check Solutions, an IBM Advanced Level Business Partner, and IBM will continue to work together with customers. Through this relationship, Carreker and IBM will bring to market Check Solutions check processing applications on IBM eServer and check processing hardware.
This acquisition is an important move forward in our strategy to expand our offerings of impressively differentiated technology solutions to financial institutions that are concentrating on revenue-generating and cost-saving solutions that bolster their competitive positions, said J.D. Denny Carreker, Chairman and Chief Executive Officer of Carreker Corporation. For our shareholders, this demonstrates one aspect of our strategy for growth by investing in quality assets that enhance our position as an e-solutions leader, Carreker said.
Check Solutions President Joe Rowell said, As part of Carreker, we look forward to continuing the same high level of value and service that our clients expect. Carreker is a rapidly growing, global leader that will provide continued innovation, resources and opportunities for our employees and customers.
We believe we are on course to be the leading payments solutions company for the financial industry. We have focused our strategy on building solutions in each of the critical competencies of the payment system. With the acquisition of Check Solutions, we are positioned to provide solutions across all of these competencies in payments systems around the globe. Until now, there has been no single organization with enough functional scope and customer penetration to broadly facilitate the further transition to electronic payments, Carreker said.
Jerry Cole, general manager, IBM Global Financial Services, said: IBM is the leader in financial services e-business infrastructure and integration software; Carreker is a leader in a broad array of financial services applications. By combining our strengths, this transaction brings additional value to Check Solutions customers. We are delighted to be partnering with Carreker in support of our Check Solutions customers.
Under terms of the acquisition agreement, Carreker will pay $109.5 million in cash and assume the net liabilities of Check Solutions. Carreker will finance the transaction through the use of $55 million of its own cash and borrow $54.5 million from a third party, to complete the purchase. In addition to growing revenues, net income and market share, the company expects the acquisition to be accretive to earnings by approximately $0.07, excluding one-time acquisition-related costs of approximately $12 million, for fiscal 2001 and also expects the acquisition to be accretive to earnings by approximately $0.15 to $0.20 for fiscal 2002.
Carreker’s eXceptions, eRM Exceptions Management, eTrac, eInform, CheckLink, Float Management and Recon Solutions will be combined with the Check Solutions products to create the Check Solutions Group within Carreker’s Global Technology Solutions Division. The Check Solutions management team will remain intact and Mr. Rowell will become the president of the Check Solutions Group, reporting to Mike Hansen, who is being named Vice Chairman of the Office of the President of Carreker Corporation and head of the Global Technology Solutions Division. Mr. Rowell also will be a member of the Carreker Corporation Policy Committee. The Check Solutions Group will be headquartered in Memphis, Tenn.
Check Solution’s market-proven technology coupled with Carreker’s leading e-finance solutions will create powerful synergies for our clients in the financial industry, Carreker said.
We look forward to the addition of many talented professionals from Check Solutions to our organization. They will bring a wealth of personal values, industry knowledge, customer relationships, technical prowess and successful results to our organization. We are excited about the potential this combination represents. Carreker said.
Robertson Stephens provided a fairness opinion to the Board of Directors of Carreker Corporation in connection with the transaction. Shareholders are invited to listen to a conference call that will be broadcast live over the Internet on Wednesday, May 23, 2001, at 8:30 a.m. Eastern Time. The Webcast of the call can be accessed through the Carreker Web site at http://www.carreker.com. Additionally, Carreker’s first quarter earnings announcement will be on Wednesday, June 6, 2001, following the close of markets.
