Intuit Inc (INTU.O) will sell its financial services unit to private equity firm Thoma Bravo LLC for more than $1.03 billion as part of a plan to shed peripheral assets after a weak tax-filing season, sending its shares up as much as 5 percent.
Intuit, developer of the tax-preparation software TurboTax, had hinted at a reorganization after a delayed start to the U.S. tax season hurt its results for the first half of the year.
It announced an organizational realignment in May to focus on expanding its tax-preparation services and its small business group unit, under which it provides its flagship accounting software QuickBooks.
Intuit bought the financial services unit, then called Digital Insight, for $1.35 billion in 2007. The unit, now known as Intuit Financial Services (IFS), failed to match the company's expectations, with growth lagging behind that of its core businesses.
IFS, which provides banking software to financial institutions, reported a revenue growth of 9 percent for the quarter ended April. In contrast, revenue at Intuit's small business unit rose 17 percent and that at its consumer tax division increased 14 percent.
"The financial institutions' online banking business was never well integrated into the company," Wedbush Securities' analyst Gil Luria told Reuters.
Intuit, which also announced it was planning to sell its health group, said it would use the proceeds from the IFS deal to boost its share repurchase program.
As of April 30, Intuit had $1.4 billion remaining for stock repurchases under the program, which runs through August 15, 2014.
Raymond James analyst Wayne Johnson said Intuit would benefit from the deals, which would help the company focus on its core businesses.
Johnson upgraded Intuit's stock by two notches to "strong buy" from "market perform" earlier on Monday, before the deal was announced.
IFS accounted for 9 percent of the company's revenue in 2012 and has 730 employees in offices in the United States and India. It is expected to have about $325 million in revenue in fiscal 2013, Intuit said.
Some IFS assets, including OFX connectivity and Mint.com, a popular free online personal finance software with 5 million users, are not part of the deal.
"I think it's a fair deal for them (Intuit)," Morningstar analyst Andrew Lange said. "It's not totally spectacular, probably more like just take a fair deal and move on."
Spokeswomen at Thoma Bravo and Intuit declined to comment beyond the statement.
Intuit shares, which have fallen 7 percent in the last three months, were trading up 4 percent at $63.50 at 1300 ET on Monday on the Nasdaq.
(Additional reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty and Sreejiraj Eluvangal)