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Broadridge Buys Inveshare's Technology Assets for $135M

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Broadridge Financial Solutions Inc. BR recently announced that it has acquired the technology assets of Inveshare Inc., a financial consultant. This transaction includes a development agreement under which Broadridge will use the acquired technology assets to develop blockchain applications for its proxy business.

However, as part of the transaction, Broadridge has granted Inveshare a perpetual license to the acquired technology assets. Also, Inveshare will continue to operate as an independent proxy communications services provider.

The total value of the deal is $135 million, of which $95 million is for the asset buyout and the remaining $40 million is for blockchain applications. Broadridge will have to make an upfront payment for the acquired assets, and pay $40 million at the time of delivery of the applications.

As per the press release, the recent transaction is expected “to accelerate Broadridge’s ability to adapt distributed ledger technology capabilities to its proxy services.”

President and Chief Executive Officer, Richard J. Daly, says that, “…these technology assets provide Broadridge with a dynamic architecture that should enable us to more rapidly develop a streamlined distributed ledger platform to bring these benefits to our clients over the next several years”.

Broadridge is a leading global provider of technology-based outsourcing solutions to the financial services industry. The company offers a broad, integrated suite of innovative global solutions across the investment lifecycle along with a wide range of cost-effective and scalable solutions. Its systems help lower clients’ capital investments in operations infrastructure, thereby allowing them to focus on core business activities.

The company’s strategy of growing through acquisitions is noteworthy. Most recently, the company acquired DST Systems Inc.’s DST North American Customer Communications (NACC) business for a cash consideration of $410 million.

DST Systems’ NACC is the largest transactional printer in North America. The unit offers customer communication services including print and digital communication solutions, content management, postal optimization and fulfillment. Therefore, this transaction will allow Broadridge to boost its digital communications offerings and expand the scale of its print communications business.

Going ahead, we are optimistic about Broadridge’s sustained focus on new product launches, share repurchase programs and regular dividend payment policies. We believe that the company’s close association with Accenture plc (ACN) will be beneficial over the long term as well.

However, competition and pricing pressure remain major concerns.

Zacks Rank & Key Picks

Currently, Broadridge carries a Zacks Rank #4 (Sell). A couple of better-ranked stocks in the broader technology sector are Ambarella Inc. AMBA and Broadcom Ltd. (AVGO - Free Report) , both sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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