It's not often that I open up my email in-box and my first thought is, "Wow" –- but that was my reaction this morning when I saw the announcement that Fiserv is buying CheckFree in an all-cash transaction valued at approximately $4.4 billion. These big deals always come as something of a surprise, even when there's been speculation about the status or future of the players.

Fiserv executives have been quite open about their intentions to "reinvent" the company or restructure in some way that will make it more competitive in today's banking technology environment. CheckFree itself has been in an acquisition mode, with its recent purchases of Carreker, Corrillian and Upstream Technologies. So, probably industry observers are not completely shocked about this transaction. Still, it represents a significant realignment in an industry that has seen considerable consolidation over the past few years.

In the press release that went out this morning, Fiserv's president and CEO Jeffery Yabuki, stated: "CheckFree's industry-leading payment and Internet banking capabilities will significantly accelerate our strategic transformation, extending our service platform to the largest financial institutions … An important objective of the transaction is to tightly integrate electronic bill payment and settlement capabilities with our core account processing and risk management solutions to create a unique value proposition unrivaled in the marketplace today."

The press release also says that Pete Kight, CheckFree's chairman and CEO, will be employed by Fiserv and appointed to its board of directors. Additionally, according to the release, Fiserv expects to realize more than $100 million in annualized cost savings and more than $125 million in annualized revenue synergies. The transaction is expected to be completed by Dec. 31, 2007.

More information should emerge at an investor call that is scheduled to take place this morning.

Posted by Kathy Burger

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