Solera Holdings Inc., a software provider to the automobile insurance industry, said Monday it would buy Explore Information Services LLC from holding company Altegrity Inc. for $520 million in cash to bring new driver violation reporting services to insurers.
Texas-based Solera said it had signed a definitive agreement to acquire Explore, which delivers subscription-based products that aggregate, standardize and match data gathered from 42 state governments to automotive property and casualty insurers. The products allow insurers to manage risk during the full life cycle of a policy.
"The acquisition is consistent with our long-term strategy of leveraging our core solutions to expand into underwriting, re-underwriting, analytics and high-value decision support software that help our clients better manage active risk," Solera Chairman and CEO Tony Aquila said.
According to Solera, the deal will lead to a 15-year tax benefit with an estimated value of about $120 million. The transaction is expected to close in the first quarter of Solera's fiscal year ending June 30, 2012.
Solera anticipates that the acquisition will boost its fiscal year 2012 adjusted net income by $0.15 to $0.17 per diluted common share. The company plans to receive senior unsecured bridge loans of $360 million from Goldman Sachs Bank USA and Bank of America Merrill Lynch to backstop a part of the transaction's payment obligations.
Explore had revenues of about $76 million for the 12 months ending Dec. 31. The Minnesota-based company provides services to 130 property and casualty insurers in the U.S., including 14 of the top 20 property and casualty insurers in the country, while Solera operates in more than 50 countries across six continents.
Solera's announcement comes on the heels of two other major purchases in April.
On April 5, Solera announced that it had repurchased 15 percent of the outstanding shares of Audatex Spain, Solera's Spanish operating company, from Nacional de Reaseguros SA, one of Spain's largest reinsurance companies.
Just a few days earlier on April 1, Solera unit Hollander — which provides salvage yard management systems and parts locating software to the automotive recycling industry in the U.S. and Canada — said it had agreed to buy assets from Inventory Technology Systems Inc.
ITS is a U.S.-based provider of tools that bring efficiency to salvage yards and increase their profitability. Hollander planned to bundle the ITS products to nearly 7,000 recycling yards in North America.
Solera claimed the deal would pave the way to tighter collaboration between the insurance, collision repair and recycling industries.
Kirkland & Ellis LLP represented Solera.
Debevoise & Plimpton LLP represented Explore in the deal.
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