Fiserv Inc. (FISV - Free Report) recently announced that it has completed the previously announced acquisition of British financial services technology firm, Monitise Plc. The deal will boost Fiserv’s capabilities in providing mobile payments solutions globally. However, financial details of the transaction were not disclosed.
Initially, Fiserv had offered to pay 2.9 pence per share in cash, valuing Monitise at almost £70 million ($89.35 million). However, Cavendish Asset Management, which owned almost 4.84% of stake, considered the offer too low.
Last month, Fiserv sweetened the offer to £75 million ($98 million) or 3.1 pence in cash, representing a premium of 34.8% more than Monitise's closing price on Jun 12, per Reuters. The final offer received support from Monitise's shareholders like Banco Santander and Visa Inc. (V - Free Report) .
Fiserv’s shares closed at $123.00 on Sep 1, down 0.6%. The stock has gained 15.8% year to date, substantially underperforming the 25.6% rally of the industry it belongs to.
Acquisitions Expanding Portfolio
Acquisitions have been a key driver for Fiserv’s expanding product portfolio over the last few years. Notably, the company has added more than 100 DNA clients since its acquisition of Open Solutions way back in 2013. In the second quarter, the company added six DNA clients, four among which have over $1 billion in assets.
Another acquisition – Architect digital banking solution – has gained significant traction within a short span of time. Moreover, addition of companies like Commercial Center, BillMatrix Next, Mobiliti have been key drivers in recent times. Notably, Mobiliti ASP subscribers grew 30% to more than 6 million in the last quarter.
Fiserv’s recent acquisition of Dovetail Group Limited strengthens its offerings in the payments infrastructure market.
We note that Monitise’s cloud-based FINKit platform (focused on the United States and the United Kingdom) has gained significant interest within a short span of time since its launch in fiscal 2016. Moreover, Monitise has significant geographic penetration into European and Middle-East markets, which was a major attraction for Fiserv.
Zacks Rank & Key Picks
Currently, Fiserv has a Zacks Rank #3 (Hold). Total System Services Inc. (TSS - Free Report) and Vantiv Inc. (VNTV - Free Report) , both carrying a Zacks Rank #2 (Buy), are two stocks worth considering in the same sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long term earnings growth rate for Total System Services and Vantiv are pegged at 12.5% and 14.3%, respectively.
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