Solera buys Explore Information for $520 million

BANGALORE (Reuters) - Solera Holdings Inc (SLH.N), which makes software for the auto insurance industry, plans to buy privately held Explore Information Services for $520 million in cash to expand in the property and casualty insurance market.

The acquisition of Explore Information, which makes software that allows property and casualty insurers to weigh the risk they are taking on, will help Solera bolster its re-underwriting and analytics products businesses.

Auto insurers use Explore Information's software, which processes traffic violation data, to identify errant drivers.

"(The acquisition) ties very well with the rest of Solera's business," Morningstar analyst Rafael Garcia said.

"With this deal Solera will be able to sell more services that clients usually purchase before and after they normally buy Solera's information services."

Solera expects the deal -- the largest in its history -- to add 15-17 cents to its fiscal 2012 adjusted net income and result in a 15-year tax benefit.

Eagan, Minnesota-based Explore Information, which had sales of $76.8 million in 2010, is owned by Falls Church, Virginia-based Altegrity, a security software and specialized law enforcement training company.

The acquisition is a step toward Solera's goal of reaching $1 billion in revenue and $450 million in adjusted EBITDA by fiscal 2014, Chief Executive Tony Aquila said in a statement.

Goldman Sachs Bank USA and BofA Merrill Lynch would provide unsecured bridge loans for $350 million to backstop a portion of the purchase price, Solera said.

Solera, which counts CCC Information Services and Mitchell International Inc among its competitors, had $339.3 million in cash and cash equivalents as of the end of 2010, according to a regulatory filing.

Solera shares, which have gained nearly a third over the last year, rose as much as 6 percent to $54.26 in heavy trade on Monday on the New York Stock Exchange. They touched a high of $53.89 earlier.

(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Saumyadeb Chakrabarty and Prem Udayabhanu)