Creates North America’s premier customer
communications technology platform
Broadridge Financial Solutions, Inc. (NYSE:BR) today announced it
has entered into a definitive agreement to acquire the North
American Customer Communications (“NACC”) business of DST Systems,
Inc. (NYSE: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 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.
“This is the next step forward in Broadridge’s journey, and it
will create value for clients and shareholders in the near, medium
and long term,” commented Richard J. Daly, President and Chief
Executive Officer, Broadridge. “Our goal has always been to be the
premier, trusted provider to our clients, offering solutions that
allow them to effectively, efficiently and securely communicate
with their customers. The addition of NACC, an industry
leader, is a natural extension of our communications business and
will provide immediate benefits for our clients through enhanced
production capabilities and expedited delivery times. This
acquisition is consistent with our strategy and adds to our bottom
line immediately. It also positions us to be a communications
leader across a number of market verticals and a provider of a
unique suite of multi-channel communications solutions, empowering
Broadridge to accelerate the industry’s conversion to digital
communications and meet the diverse preferences of our clients’
customers.”
Mike Abbaei, Head of DST’s Customer Communications, stated, “The
management team and I are delighted to join Broadridge, a trusted
industry leader in providing critical customer
communications. The combined entity will create the
industry’s largest distributor of critical client content across
North America. We share the same focus on client service and are
excited by the differentiated solutions across all channels that
this acquisition enables. The integration of these capabilities
will align our clients to benefit from the industry’s best
technologies, quality and footprint. It also strategically
positions our clients to benefit from the evolution of consumer
preferences.”
Douglas R. DeSchutter, President, Digital Communications,
Broadridge, said, “This acquisition establishes a best-in-class,
integrated technology platform positioned to successfully leverage
a rapidly growing digital opportunity. The consumer reach of the
combined business exceeds 75% of North America’s mailboxes and will
allow Broadridge to greatly expand its role in digitizing critical
investor and consumer content and to make every communication more
valuable.”
The transaction is subject to customary closing conditions and
is expected to close in July 2016.
Conference CallBroadridge’s management will
host a conference call at 8:30AM EST, today, Tuesday, June 14,
2016. Parties in the United States and Canada can access the call
by dialing (877) 211-9887 and callers outside North America may
dial (706) 634-1015, conference ID number: 31888816.
A live webcast of the call will be available to the public on a
listen-only basis. To listen to the webcast and view the slide
presentation, go to www.broadridge-ir.com. The presentation will
also be available to download and print approximately one hour
before the webcast. Broadridge’s news releases, current financial
information, SEC filings and Investor Relations presentations are
accessible on the same website.
About BroadridgeBroadridge Financial Solutions,
Inc. (NYSE:BR) is the leading provider of investor communications
and technology-driven solutions for broker-dealers, banks, mutual
funds and corporate issuers globally. Broadridge's investor
communications, securities processing and managed services
solutions help clients reduce their capital investments in
operations infrastructure, allowing them to increase their focus on
core business activities. With over 50 years of experience,
Broadridge's infrastructure underpins proxy voting services for
over 90% of public companies and mutual funds in North America, and
processes on average $5 trillion in equity and fixed income trades
per day. Broadridge employs approximately 7,400 full-time
associates in 14 countries. For more information about Broadridge,
please visit www.broadridge.com.
Forward-Looking StatementsThis press release
and other written or oral statements made from time to time by
representatives of Broadridge may contain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Statements that are not historical in nature,
and which may be identified by the use of words such as “expects,”
“assumes,” “projects,” “anticipates,” “estimates,” “we believe,”
“could be” and other words of similar meaning, are forward-looking
statements. In particular, information appearing in the “Fiscal
Year 2016 Financial Guidance” section are forward-looking
statements. These statements are based on management’s expectations
and assumptions and are subject to risks and uncertainties that may
cause actual results to differ materially from those expressed.
These risks and uncertainties include those risk factors discussed
in Part I, “Item 1A. Risk Factors” of our Annual Report on Form
10-K for the fiscal year ended June 30, 2015 (the “2015 Annual
Report”), as they may be updated in any future reports filed with
the Securities and Exchange Commission. All forward-looking
statements speak only as of the date of this press release and are
expressly qualified in their entirety by reference to the factors
discussed in the 2015 Annual Report.
These risks include: the success of Broadridge in retaining and
selling additional services to its existing clients and in
obtaining new clients; Broadridge’s reliance on a relatively small
number of clients, the continued financial health of those clients,
and the continued use by such clients of Broadridge’s services with
favorable pricing terms; changes in laws and regulations affecting
Broadridge’s clients or the services provided by Broadridge;
declines in participation and activity in the securities markets;
any material breach of Broadridge security affecting its clients’
customer information; the failure of Broadridge’s outsourced data
center services provider to provide the anticipated levels of
service; a disaster or other significant slowdown or failure of
Broadridge’s systems or error in the performance of Broadridge’s
services; overall market and economic conditions and their impact
on the securities markets; Broadridge’s failure to keep pace with
changes in technology and demands of its clients; Broadridge’s
ability to attract and retain key personnel; the impact of new
acquisitions and divestitures; and competitive conditions.
Broadridge disclaims any obligation to update or revise
forward-looking statements that may be made to reflect events or
circumstances that arise after the date made or to reflect the
occurrence of unanticipated events, other than as required by
law.
Broadridge Financial Solutions,
Inc. |
Reconciliation of Non-GAAP to GAAP
Measures |
Impact of Acquisition of NACC Business
on Diluted EPS Projections |
(Unaudited) |
|
Projected
Impact of Acquisition on Earnings Per Share(1) |
|
Year 1 Estimates |
Year 2 Estimates |
Adjusted Diluted
earnings per share (Non-GAAP) (1) |
|
$0.11 -
$0.14 |
$0.16 -
$0.21 |
Diluted earnings per
share (GAAP) |
|
$0.01 -
$0.03 |
$0.09 -
$0.13 |
|
|
|
|
(1) Adjusted Diluted EPS (Non-GAAP) is adjusted to exclude
the projected impact of amortization of acquired intangibles and
integration costs. Net of tax on a diluted share basis this
adjustment is estimated to be $0.11 in Year 1 and $0.08 in Year 2.
Numbers may not sum due to rounding.
Contact Information
Investors:
Brian S. Shipman, CFA
Vice President, Head of Investor Relations
(516) 472-5129
brian.shipman@broadridge.com
Media:
Linda Namias
Sr. Director, Corporate Communications
(631) 254-7711
linda.namias@broadridge.com
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