Solera Holdings, an auto insurance software company, has agreed to pay $289 million for an equity interest in Welsh Carson Anderson & Stowe-backed Service Repair Solutions. The deal is expected to close in 2014.
Solera Holdings, Inc. (NYSE: SLH), a leading global provider of software and services to the automobile insurance claims processing and decision support industries, today announced that it has signed a definitive agreement to purchase equity interests in a parent company of Service Repair Solutions, Inc. (“SRS”) from an affiliate of Welsh, Carson, Anderson & Stowe (“Welsh Carson”), a leading private equity firm (the “Joint Venture”). The transaction is subject to customary closing conditions, including Hart-Scott-Rodino clearance, and is expected to close in Solera’s second quarter of fiscal year 2014.
SRS is a leading provider in the $200B service, maintenance and repair market with proprietary databases and workflow solutions. The combination of Solera and SRS will expand Solera’s reach deeper into household decisions related to the total cost of automobile ownership. This marks yet another step as Solera strengthens its insurance carrier, auto dealer, mechanical and collision repair facility, and OEM relationships.
SRS’s market-leading solutions help auto dealers and mechanical repair shops to increase their efficiency, profitability and customer loyalty. SRS’s diagnostic and repair database includes over 800,000 user and expert-generated, mechanical diagnoses, and is utilized by approximately 225,000 auto technicians in 50,000 repair shops in the U.S. and Canada.
SRS’s dealer services business also leverages a proprietary database of more than 78 million repair orders, 28 million completed inspections and 9 million pages of OEM data used by approximately 1,000 auto dealers.
Tony Aquila, Solera’s founder, Chairman and Chief Executive Officer said, “We are thrilled to be working with Welsh Carson and SRS’s management team, as we believe we can help them build upon the double-digit top-line growth that SRS has enjoyed over the last five years.”
“Partnering with Solera gives SRS the benefit of the strong operating culture that has driven Solera’s solid track record. Furthermore, Solera is uniquely qualified to accelerate SRS’s international expansion through its global footprint,” said Sanjay Swani, General Partner of Welsh Carson. “We look forward to working with Solera and SRS management.”
Under the terms of the Joint Venture agreements, Solera will purchase at least 50% of the Joint Venture shares for approximately $289 million. Solera will have the right to call Welsh Carson’s Joint Venture shares, and Welsh Carson will have the right to put its Joint Venture shares to Solera. Solera will have operational control of the Joint Venture, and Tony Aquila will be its chairman.
Assuming eight months of pre-synergy contribution from SRS during Solera’s fiscal year 2014, the transaction is expected to generate:
Revenue of between $80 million and $82 million; and
Adjusted Net Income per common share attributable to Solera of between $0.20 and $0.22.
Solera is a leading global provider of software and services to the automobile insurance claims processing and decision support industries. Solera is active in more than 65 countries across six continents. The Solera companies include Audatex in the United States, Canada, and in more than 45 additional countries, Informex in Belgium and Greece, Sidexa in France, ABZ and Market Scan in the Netherlands, HPI in the United Kingdom, Hollander serving the North American recycling market, AUTOonline providing salvage disposition in a number of European and Latin American countries, IMS providing medical review services, and Explore providing data and analytics to United States property and casualty insurers. For more information, please refer to the company’s website at http://www.solerainc.com.
About Welsh, Carson, Anderson & Stowe
Welsh, Carson, Anderson & Stowe focuses its investment activity in two target industries, information/business services and healthcare. Since its founding in 1979, the Firm has organized 15 limited partnerships with total capital of $20 billion. WCAS has a current portfolio of thirty-three companies. The Firm seeks to (i) invest in growth businesses, (ii) partner with outstanding management teams and (iii) build long-term value through a combination of operational improvements, strategic growth initiatives and complementary acquisitions. The Firm is currently investing an equity fund, Welsh, Carson, Anderson & Stowe XI, L.P. See www.welshcarson.com to learn more.