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Kirkland Reps Thoma Bravo In $1B Intuit Carveout

Private equity firm Thoma Bravo LLC agreed Monday to buy the financial services division of Intuit Inc., which provides online and mobile banking software to banks, for about $1.025 billion.

The carveout creates a standalone company offering online banking, bill payment and customer rewards. Clients include Bank of America NA, BancorpSouth and smaller community banks and credit unions across the Midwest and Sun Belt.

Intuit will hold onto two businesses housed in the unit: personal finance tracker and Open Financial Exchange, a data service that lets parties securely swap information.

The acquired businesses, based in Westlake Village, Calif., posted $305 million in revenue during the 2012 fiscal year and are expected to rake in $325 million in the fiscal year that ends July 31, Intuit said. That represents just 7 percent of Intuit's $4.5 billion forecast, a small fraction of the software giant's haul.

The acquisition "is consistent with our strategy of buying great technology franchises with significant recurring revenue," Orlando Bravo, managing partner at Thoma Bravo, said in a statement. "We look forward to accelerating the company's growth as an independent business through our buy-and-build principles."

Through the deal, Intuit is shedding businesses that focus on larger corporate clients like banks and credit unions. The maker of the popular TurboTax and Quicken accounting software plans to sharpen its focus on products for consumers and small-business owners, "continuing to build our durable competitive advantage in those segments," CEO Brad Smith said in a statement.

Intuit said it will use the proceeds to continue buying back stock. The company has repurchased some $3.8 billion in stock — about one-quarter of its outstanding shares — over the past five years. Those buybacks, alogn with a new quarterly dividend and consistent bottom-line growth, has underpinned a near-tripling of its share price since mid-2008.

The deal — structured as a merger rather than an asset purchase, as is more common for carveouts — is the second in a week for Thoma Bravo, a software-focused sponsor with some $4 billion under management. Last week, it struck a $395 million take-private deal for Keynote Systems Inc., whose cloud-based software tests of websites across different browsers and devices.

Last month, Thoma Bravo portfolio company Blue Coat Systems Inc. agreed to buy Solera Networks, a leading provider of cybersecurity intelligence. That followed a deal in November for Crossbeam Systems Inc., which provides security for cellphone and wireless networks.

The New York-based fund manager is one of a handful of private equity investors devoted to technology, a space generally left to early-stage venture capitalists and Silicon Valley's corporate giants. Along with peers like Insight Venture Partners and Golden Gate Capital, Thoma Bravo has poured billions of dollars into the fast-moving cloud software and security sectors, with an emphasis on business and financial services.

Insight and Golden Gate teamed up with Bain Capital LLC earlier this year on a $6.8 billion deal for BMC Software Corp., beating out a reported team-up of KKR & Co. LP, TPG Capital and Thoma Bravo. Insight was brought in by Blackstone Group LP in a short-lived bid for Dell Inc.

Thoma Bravo is represented by a Kirkland & Ellis LLP team led by Chicago-based corporate partners Gerald Nowak and Theodore Peto.

Intuit is represented by a Latham & Watkins LLP team led by Silicon Valley partner Luke Bergstrom, assisted by partners J.D. Marple (technology), Kirt Switzer (tax), Karen Silverman and Joshua Holian (antitrust), Jay Metz (employee benefits) and Glen Collyer (finance). Qatalyst Partners, led by managing director Brian Cayne, provided financial advice.