Digital Insight Corp has agreed to acquire nFront Inc in a $439m stock swap that combines two rivals in the internet banking services arena. Both companies provide services to community financial institutions – banks and credit unions that aren’t large enough to build their own electronic home banking systems. The combined company will serve 645 such clients with about 16 million potential end users, Digital Insight said. Of that total, roughly 640,000 are currently active end-users.
Calabasas, California-based Digital Insight will hand over 0.579 of a common share in exchange for each outstanding share of nFront stock. Based on Friday’s Digital Insight closing price, the deal is worth $29 per share – a 55% premium over Atlanta- based nFront’s Friday close of $18.50. The acquisition is expected to close in the first quarter of next year and Digital Insight expects the transaction to be immediately accretive to both revenue and gross profit per share.
The combined company will operate under the Digital Insight name and be headquartered in Calabasas. It will boast annualized revenue of about $30m. Digital Insight CEO John Dorman will keep his position and serve as chairman of the board, while nFront CEO Tripp Rackley will become the new entity’s president and take a seat on the board. The overall board will consist of five Digital Insight directors and two from nFront.
