Broadridge (BR) to Acquire RPM Technologies for $300 Million

Broadridge Financial Solutions, Inc. BR inked a deal to purchase RPM Technologies for $300 million.

RPM Technologies is one of the leading providers of enterprise wealth management software solutions and services in Canada. At present, RPM's technology platforms support more than 15 million customer accounts.

The closure of the deal is subject to completion of an intercompany reorganization by RPM Technologies and standard customary closing conditions.

We observe that shares of Broadridge have gained 28.8% so far this year compared with 25.2% rise of the industry it belongs to and 12.6% rise of the Zacks S&P 500 composite.

 

Deal Details & Benefits

The acquisition will see the addition of RPM Technologies (state-of-the-art platforms and blue-chip client roster) on Broadridge's Canadian wealth management business. The combined entity is expected to better serve both RPM's and Broadridge's clients by helping them gain extensive product expansion opportunities, better digital channel capabilities and seamless enterprise solutions.

The buyout is expected to expand Broadridge Canada's addressable market by adding enhanced mutual fund and deposit manufacturing capabilities and providing a solution set for the retail banking sector.

The move seems to be part of Broadridge’s efforts to strengthen its position in the growing wealth management software market in Canada and North America as a whole. Per a recent research report by Grand View Research, the global wealth management software market is anticipated to reach $5.8 billion by 2025, reflecting a solid CAGR of 15.3% from 2019-2025.

Additionally, the acquisition is expected to contribute $40-50 million to Broadridge’s top line in fiscal 2020.

We believe the move will help Broadridge strengthen its Global Technology and Operations segment, which serves capital markets, wealth management, and asset management firms. Revenues from the segment grew $1 million year over year in third-quarter fiscal 2019 on the back of higher net new business from closed sales.

Zacks Rank & Other Stocks to Consider

Currently, Broadridge is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, WEX WEX and FLEETCOR Technologies FLT. While Navigant Consulting (NCI) sports a Zacks Rank #1, WEX and FLEETCOR carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Navigant Consulting, WEX and FLEETCOR is 13.5%, 15% and 16.5%, respectively.

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