Fiserv Sells Insurance Ops, To Shrink Float (FISV)

Fiserv Inc. (NASDAQ: FISV) has announced a rather interesting move, and interestingly enough all that will be accomplished on the surface is a direct shrinkage of the company.

The company has announced that it will sell a majority interest in insurance business operations to Trident IV, a private equity fund managed by Stone Point Capital LLC.  You can take that it gave that operation an implied new value of $1 Billion, because the company will receive a $510 million payment as net proceeds for a 51% stake. The equity valuation would be lower though, as it lists the proceeds being $205 million in equity and $335 million in debt.  Fiserv noted that this will free up capital and will allow it to focus on financial products.

Simultaneously, the company has announced that it will turn around and repurchase up to 10 million shares of common stock in a repurchase program of roughly 6% of its float.  Based upon yesterday’s close that would be $453 million if it used the entire sum at that fixed theoretical price. 

The company has said this action will dilute earnings in 2008 by $0.02 to $0.03 and it is backing GAAP EPS of $3.28 and non-GAAP EPS of $3.40.  First Call has estimates as $3.34 EPS on a non-GAAP basis.

Its 52-week trading range is $44.16 to $58.32.  Shares are indicated higher by roughly $1.00 in pre-market trading, although there are no shares that have yet traded hands.

Jon C. Ogg
July 2, 2008