SoFi Technologies, Inc. (Nasdaq: SOFI), an online personal loan firm, has inked a deal to take over privately run Technisys, a major cloud-based lending platform, in an all-stock transaction valued at $1.1 billion. SoFi is scheduled to complete the acquisition of the online multiple financial product solution providers in the June 2022 quarter. The stock of SoFi closed at $10.26, down $1.13 or 9.92% from the prior close.
Following the takeover, the shareholders of finance infrastructure provider Technisys will receive roughly 84 million shares of SoFi shares, reflecting 10% of the latter’s completely diluted share count by the end of last September. On the basis of the VWAP (volume-weighted average price) of the San Francisco-California-based SoFi’s shares for a period of 20-trading days ended February 15, the total value of shares allotted to Technisys is worth about $1.10 billion. Furthermore, Maguel Santos will continue as CEO of the merged entity.
From client interface building abilities to a customized multi-product financing core, and registry with a completely integrated handling and card disbursement capability, the acquisition is intended to establish a completely vertically integrated financial software system.
SoFi estimates that the takeover will result in additional revenue in the range of between $500 and $800 million by the end of 2025, comprising Technisys’ core revenue and top-line synergies realized through the vertically integrated functionalities, at significant progressive margins.
Between 2023 and 2025, the vertical integration with Galileo, a vendor of cloud-based financial technology-related services, is projected to save roughly $75 to $85 million in total expenditures, with a subsequent yearly savings of between $60 and $70 million.
After the closure of stock markets on March 1, SoFI intends to present its 4Q 2021 and FY 2021 financial statements and uphold its originally stated financial forecast for both time frames. Also, on that day, the company plans to issue a financial outlook for FY 2022 that takes into account the effects of the planned Technisys takeover, the launch of SoFi Bank, and the prolongation of the student loan repayment suspension from January 31 to May 1, 2022.
While Allen & Company LLC acted as a financial advisor, Wachtell, Lipton, Rosen & Katz performed the role of legal advisor to SoFi. Likewise, for Technisys, legal advice was provided by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
The acquisition of Technisys is expected to keep the stock range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock of SoFi has broken the major support level at 14. The next minor support is anticipated only near 10. Additionally, the stock is trading below its 50-day moving average, while the MACD indicator is in the negative region. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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