(RTTNews) - SoFi Technologies, Inc. (SOFI), a digital personal finance company, on Tuesday said it entered into a definitive merger agreement to acquire privately held Technisys, a leading cloud-native, digital multi-product core banking platform, in an all-stock deal valued at $1.1 billion.
The transaction is expected to close by the second quarter of 2022.
Technisys' shareholders would receive approximately 84 million shares of SoFi common stock, which is less than 10 percent of SoFi's fully diluted share count at end of September, 2021 as aggregate consideration. Based on the volume-weighted average price of SoFi common stock for the 20-trading day period ended February 15, these shares have an aggregate value of approximately $1.1 billion.
The deal is expected to create an end-to-end vertically integrated banking technology stack, from user interface development capabilities to a customizable multi-product banking core and ledger with fully integrated processing and card issuing availability.
SoFi expects that the estimated incremental revenue from the acquisition, including base revenue of Technisys and revenue synergies of the vertically integrated capabilities, will add a cumulative $500 to $800 million through year-end 2025, at high incremental margins.
The vertical integration with Galileo, the provider of fintech cloud services is also expected to create approximately $75 to $85 million in cumulative cost savings from 2023 to 2025 and approximately $60 to $70 million annually thereafter.
Following the closure of the deal, Miguel Santos will continue as CEO.
In its fourth quarter and fiscal year 2021 results planned to be released after the close of financial markets on Tuesday, March 1, SoFI expects to maintain its previously communicated financial guidance for both the periods. A financial guidance for 2022 that would incorporate inter alia the impact of the proposed Technisys acquisition, the impact of opening SoFi Bank, and the extension of the federal student loan payment moratorium scheduled from January 31, 2022 to May 1, 2022 would also be released on the same day.
Allen & Company LLC served as financial advisor and Wachtell, Lipton, Rosen & Katz acted as legal advisor to SoFi. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP acted as legal advisor to Technisys.
Shares of SoFi Technologies are currently trading in pre-market at $11.09, down $0.30 or 2.63 percent from previous close.
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