M&A Monday at Broadridge: acquires DST Systems

The M&A lawyers at Broadridge must have been very busy this weekend.

In its second acquisition announced today, financial technology provider Broadridge Financial Solutions, Inc. (NYSE:BR) has announced that it has agreed to buy the North American Customer Communications (NACC) business of DST Systems, Inc. (NSYE:DST) for $410 million in cash, subject to customary working capital and other closing adjustments. As the largest transactional printer in North America, NACC is a leading provider of customer communication services including print and digital communication solutions, content management, postal optimization, and fulfillment.

The transaction is subject to customary closing conditions and is expected to close in July 2016.

Broadridge earlier today announced that it had bought 4sight Financial Software to build its securities financing business. Terms of that deal were not disclosed.

DST Systems’ NACC business has over 2,300 associates and four production facilities located in El Dorado Hills, CA, South Windsor, CT, Kansas City, MO, and Markham, Ontario, Canada. The NACC business has pioneered innovations to drive operational excellence including best of breed technology to onboard clients and deliver accurate and timely communications to their customers. Its clients include many Fortune 500 companies, primarily in financial services and also in healthcare, telecommunications and utilities. In their fiscal year 2015, the NACC business generated $1.1 billion of total revenue, and $445 million of fee revenue. Senior management, led by Mike Abbaei, Head of DST’s Customer Communications business, will be joining Broadridge as part of this transaction.

Upon closing, the NACC business will become part of Broadridge’s Investor Communication Solutions business, creating North America’s premier customer communications technology platform. This will enhance Broadridge’s position as a leading provider of multi-channel communications with exceptional scale in print communications and leading offerings for digital communications. The combination will allow clients to engage customers with new, unique capabilities and further enhance Broadridge’s ability to meet its clients’ current and future customer communications needs. Broadridge expects to achieve approximately $20 million in annualized cost synergies within 18-30 months of closing. Broadridge anticipates the NACC business will be immediately accretive to its GAAP and adjusted earnings, inclusive of incremental interest expense. Broadridge expects the acquisition to be $0.01 to $0.03 per share accretive on a GAAP basis and $0.11 to $0.14 per share accretive on a non-GAAP adjusted basis in the first year. Broadridge also expects the acquisition to be $0.09 to $0.13 per share accretive on a GAAP basis and $0.16 to $0.21 per share accretive on a non-GAAP adjusted basis in the second year.

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