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Fiserv (FISV) to Acquire Parts of U.S. Bancorp Owned Elan

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Fiserv, Inc. announced yesterday that it has inked a deal to acquire parts of U.S. Bancorp (USB - Free Report) owned Elan Financial Services business.

Valued at $690 million, the deal includes Elan’s debit card processing, ATM Managed Services and MoneyPass surcharge free network. It excludes the Elan credit card issuing and corporate payments businesses.

Backed by this acquisition, Fiserv intends to expand its solutions in ATM Managed Services area. The company will also offer additional services like Accel debit payments network, risk management solutions and enhanced debit platform capabilities to Elan clients.

Subject to regulatory approval and other customary closing conditions, this transaction is expected to close in the fourth quarter of 2018.

In a year’s time, shares of Fiserv have gained 27.3%, outperforming the S&P 500’s 16.9% rally.

Fiserv Looks to Strengthen Market Position

The buyout is expected to strengthen the company’s position in the debit card processing space and expand its mobile and digital payments offerings for both consumers and businesses. It is anticipated to be accretive to Fiserv’s adjusted earnings in 2019.

Fiserv, Inc. EPS Diluted (TTM)

Jeffery Yabuki, president and chief executive officer of Fiserv, stated that “This acquisition expands our capabilities and provides additional expertise, which together should enhance the value we provide our clients.

We believe that the latest move will provide an impetus to Fiserv’s Payments and Industry Products segment. In the last reported quarter, revenues at the segment increased 7.4% year over year, courtesy of robust performance by card services and biller solutions.

Zacks Rank & Key Picks

Currently, Fiserv carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services sector include Broadridge Financial Solutions (BR - Free Report) and Paychex (PAYX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share growth rate for Broadridge Financial Solutions and Paychex is 10% and 8.2%, respectively.

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