Fair, Isaac to purchase HNC for $810 million

Goal in deal is to acquire consumer trends software

April 30, 2002|By BLOOMBERG NEWS

SAN RAFAEL, Calif. - Fair, Isaac & Co., which makes software to assess credit quality, agreed yesterday to buy HNC Software Inc. for about $810 million in stock to gain computer programs that predict consumer trends.

HNC shareholders will get 0.346 of a new Fair Isaac share for each share owned, the companies said in a statement. The price is based on Fair Isaac's closing share price Friday of $64.09, and values HNC at about $22.18 a share.

Fair Isaac said it will gain products and services for more customers in industries such as financial services, health care, insurance and telecommunications. The company is known for inventing the FICO system, used by banks, credit-card issuers and credit-reporting agencies to rate a consumer's credit risk.

"We needed to increase scale and offer more products and services," Fair Isaac Chief Executive Officer Thomas Grudnowski said on a conference call.

HNC's customers include J.P. Morgan Chase & Co., AT&T Corp., Wal-Mart Stores Inc. and Sears, Roebuck andCo., according to Hoover's Inc.

Fair Isaac, based in San Rafael, Calif., said it would split its stock 3-for-2 and buy back as many as 2.25 million shares after the split is completed. The split will increase the number of shares outstanding to about 35 million. The company said it would issue about 12 million shares to acquire HNC.

Shares of Fair Isaac fell $6.59, or 10.3 percent, yesterday to close at $57.70. They had risen 48 percent in the past year. HNC rose $2.08, or nearly 12 percent, to $19.52. The stock had fallen 35 percent in the past year.

The transaction will add to Fair Isaac's earnings next year. San Diego-based HNC employs about 1,200 and had sales of $226.7 million last year. Fair Isaac, with about 1,400 workers, had revenue last year of $329.2 million.

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