February 24, 2020 / 9:12 PM / 6 months ago

Intuit to buy Credit Karma for $7.1 billion in cash-and-stock deal

(Reuters) - Intuit (INTU.O) said on Monday it would buy privately held personal finance portal Credit Karma in a cash-and-stock deal for about $7.1 billion, as the TurboTax maker seeks to expand further into consumer finance.

FILE PHOTO: An Intuit office is shown in San Diego, California August 21, 2015. REUTERS/Mike Blake

The deal hands Intuit access to Credit Karma’s trove of financial data on millions of Americans.

Credit Karma gets data by letting customers access their credit scores and some personal finance tools for free. In turn, it offers third-party credit cards and loans to customers, tailored to their credit history.

“Together with Credit Karma, the customers will have access to all their information in one place, and then we’ll be able to match them with financial products that are right for them,” Chief Executive Officer Sasan Goodarzi said.

This is the largest deal ever in Intuit’s 37-year history and the first sizable one under Goodarzi, who took over the reins last year.

Credit Karma was valued at about $4 billion based on a funding round in 2018, led by private equity firm Silver Lake. (intuit.me/37WWuxt)

The purchase price will be payable in equal portions of cash and Intuit shares, which are being valued at about $299.73 per share, the company said.

The transaction would be neutral to accretive to Intuit’s adjusted earnings per share in the first year after the deal closes, which is expected in the second half of 2020.

“(The) combination could offer significant data advantages” said KeyBanc Capital Markets analyst Josh Beck, “while potentially providing a launching pad for future innovative financial services.”

The Wall Street Journal first reported details of the talks on Sunday.

Intuit’s shares were up nearly 2% after market. Intuit’s shares closed down nearly 4% on Monday. Broader markets also fell sharply amid heightened coronavirus fears. [.N]

The deal is a nod to startups choosing to sell themselves over pursuing a listing. Credit Karma was expected to be eyeing an IPO. Another fintech startup, Plaid Inc, sold itself in a $5.3 billion deal to Visa Inc (V.N) last month.

Intuit reported its second-quarter results on Monday, posting a 27% rise in profit compared to a year earlier, as it earned more from its QuickBooks book-keeping software. (intuit.me/2HO49n0)

Reporting by Kanishka Singh and Bharath Manjesh in Bengaluru; Editing by Jane Merriman and Shounak Dasgupta

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