Envestnet Acquires Fintech Startup Yodlee for $590M; Aims to Deliver Better Outcomes to Improve Investors’ Financial Health

yodleeenvestnetEnvestnet, Inc. (NYSE:ENV), a leading provider of unified wealth management technology and services to financial advisors, and Yodlee, Inc. (Nasdaq: YDLE), a leading cloud-based platform driving digital financial innovation, announced that the Boards of Directors of both companies have unanimously approved a definitive agreement under which Envestnet will acquire all of the shares of Yodlee in a cash and stock transaction valued at $18.88 per share, or approximately $660 million on a fully-diluted equity value basis. As Yodlee has approximately $70 million in cash and cash equivalents, the transaction reflects an enterprise value of approximately $590 million.

Jud Bergman“The acquisition of Yodlee is a watershed moment in the financial technology industry. We have long admired Yodlee’s innovative solutions and are excited to bring the companies together,” said Jud Bergman, Chairman and Chief Executive Officer of Envestnet. “The union of these two pioneers will enable investors and the advisors who serve them to access and make better sense out of their disparate and complicated financial data. We believe this represents a quantum leap in accuracy and knowledge that will deliver better outcomes to improve the financial health of investors.”

Yodlee powers digital financial solutions for over 20 million paid users and over 850 financial institutions and financial technology innovators. Founded in 1999, the company has built a network of over 14,000 data sources and been awarded 72 patents. Headquartered in Redwood City, California, with more than 975 employees worldwide, Yodlee generated revenues of $98.6 million for the 12 months ended June 30, 2015.

yodlee anil arora“This is an exciting combination for our shareholders, clients, and employees. Yodlee has taken the lead in building out a digital ecosystem with leading financial institutions and financial technology innovators for consumers and small-to medium-sized businesses and Envestnet has done the same for advisors,” said Anil Arora, President and Chief Executive Officer of Yodlee, who will become Vice Chairman of the combined company’s Board of Directors and Chief Executive of the Yodlee subsidiary when the deal closes. “The union of Yodlee and Envestnet will create a company unmatched in its ability to improve and simplify people’s financial lives around the world.”

The combination of Envestnet’s end-to-end wealth management platform and Yodlee’s data aggregation solutions aims to deliver more value through the Envestnet platform. The combination of Yodlee’s expertise with the Envestnet platform seeks to empower advisors to cross the digital divide and provide broader visibility into their clients’ financial well-being, both of which are essential to better decisions and ultimately better outcomes.  The transaction represents the continuation of Envestnet’s  growth strategy. The combination of Envestnet and Yodlee hopes to provide for a deeper level of customer engagement and substantial opportunities for revenue synergies.

Bill Crager“Yodlee is the preeminent name for data in financial services today. The core of every financial transaction and every financial decision is data. The Yodlee platform brings together client permissioned financial data and analytics in unique ways to power personalized and dynamic financial apps and generate business insights,” commented Bill Crager, President of Envestnet. “Financial institutions, advisors and investment managers using the Envestnet platform will be able to provide a more interactive and informative digital advice experience for clients, powered by an expanding array of data mining and predictive analytical tools.”

Transaction Details

Money Dollars Benjamin FranklinjpgEnvestnet will acquire Yodlee in a cash-and-stock transaction for $18.88 per share, representing fully-diluted equity value of approximately $660 million. As Yodlee has approximately $70 million in cash and cash equivalents, the transaction reflects an enterprise value of approximately $590 million. The deal price consists of $10.78 per share in cash and $8.10 per share in Envestnet stock, and is expected to be funded with available balance sheet cash, Envestnet stock, and up to $200 million in committed debt financing.

The stock portion of the consideration will be determined based upon the volume-weighted average price per share of Envestnet common stock for the 10 consecutive trading days ending on (and including) the second trading day immediately prior to completion of the transaction, subject to a collar of $39.006 to $47.674 per share.

In connection with the definitive agreement, funds affiliated with Warburg Pincus, which collectively own approximately 26.9 percent of Yodlee’s common stock, have entered into a voting agreement pursuant to which it has committed to support the transaction.

The transaction is expected to close in the fourth quarter of 2015 or in the first quarter of 2016, subject to customary closing conditions, as well as approval by Yodlee stockholders. Envestnet and Yodlee will continue to operate separately until the transaction closes.

Strategic Rationale

According to the statement, Envestnet and Yodlee expect that the transaction will:

  • Combine the leading wealth management technology and services platform for financial advisors, and the leading cloud-based platform driving digital financial innovation
    • Yodlee’s APIs for financial institutions and financial technology innovators, ecosystem of digital financial apps, and data analytics complements Envestnet’s expansive wealth management portfolio, advisor network, and data analytics solutions.
  • Generate powerful cross-selling potential and market expansion
    • The combined company’s cloud-based network will create an unprecedented level of engagement between the financial advisors and investors, enabling them to deliver the most informed recommendations through greater insights. The combination is also expected to widen the merged company’s reach and strategic partnership potential.
  • Accelerate the combined company’s long-term growth profile
    • The combination is expected to add at least 100 basis points to Envestnet’s revenue growth rate and adjusted EBITDA growth rate in 2016. Furthermore, the transaction is expected to be accretive to Envestnet’s adjusted EBITDA per share in 2016 and beyond and adjusted EPS in 2017 and beyond.
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