Proactive Acquisitions by Ebix - Analyst Blog

By Zacks | June 14, 2012 AAA

Earlier this week, Ebix, Inc. (EBIX) declared that it has completely acquired two businesses, PlanetSoft, Inc. and Fintechnix. Although Ebix had no financial advisors in purchase transactions of the two companies, both acquisitions are expected to eminently bolster Ebix's earnings quite comprehensively. The acquisition of PlanetSoft was initially proposed to be made under a $40 million deal; however, the actual price paid is yet to be disclosed. Ebix shall be able to conflate its insurance and investment operations pervasively through this acquisition along with few other benefits such as lead generation facilities, customer relationship management (CRM), claims, issuance of policies, etc.

The second acquisition of Sydney-based Fintechnix was made at a cash price of AUD 5.25 million. This Australian firm has been supporting various financial service institutions with its information technology solutions since almost ten years now and is likely to abet the technological standards of Ebix with this synergy.

On June 5, 2012, the company had announced that it would project an annualized run rate of nearly $100 million as earnings before interest, taxes, depreciation and amortization (EBITDA) from its recent acquisition spree. This appears to be quite achievable as Ebix seems to be moving progressively towards not only meeting but also surpassing its target of generating an annualized run rate of $200 million in 2012 by being strategically proactive on the acquisition front.

Even though Ebix strides ahead keeping in mind both short-term and long-term goals, it would be wise to remain solicitous of ominous rivals prevalent in the industry Ebix pertains to. Big players in this regard include Syntel, Inc. (SYNT), The KEYW Holding Corporation (KEYW) and Forrester Research Inc. (FORR).

The company currently retains a Zacks #2 Rank, which translates into a short-term 'Buy' rating. We also maintain a long-term 'Neutral' recommendation on the stock.

 
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