US financial IT firm Fiserv has signed definitive agreements to sell part of its investment support services (Fiserv ISS) operations to online brokerage TD Ameritrade and to the president of the unit in two transactions worth up to $375 million.
TD Ameritrade is acquiring Fiserv Trust Company and the accounts of Fiserv's institutional retirement plan and adviser services operations for $225 million in cash.
The broker will also pay an additional $100 million if revenue retention targets are met over the 12 months after the deal closes. In addition, TD Ameritrade will reimburse Fiserv for capital remaining in the business at close.
Fiserv says it will retain its additional excess capital of about $30 million. The vendor will also provide TD Ameritrade with services for up to six months after the deal closes to ensure an orderly transition.
Commenting on the deal Tom Bradley, president, TD Ameritrade, says: "The Fiserv client base will benefit from our industry-leading technology, flexible service and ongoing advisor advocacy efforts."
In a separate transaction Bob Beriault, who is currently group president for Fiserv ISS, is acquiring the remaining accounts and net capital of the ISS unit for approximately $50 million in cash.
Fiserv says it will retain a preferred share minority interest in the new private company, which will provide back-office and custody services for 190,000 retirement accounts.
The transactions, which are subject to customary conditions and regulatory approvals, are expected to close by the end of the year.
Fiserv will likely re-invest the returns from the sale in further acquisitions to bolster its core business. Jeffery Yabuki, president and chief executive officer of Fiserv comments: "The proceeds from this sale will provide us with additional capital to deploy in a manner that builds shareholder value. We are focused on opportunities which enhance our long-term growth prospects in businesses where we have a strong competitive position."