Fair, Isaac & Co. to acquire HNC Software for 3.11 times revenue

Weekly Corporate Growth Report, May 13, 2002

The Deal: Fair, Isaac and Company Inc. has agreed to purchase HNC Software Inc. in a stock-for-stock transaction. Fair Isaac will provide 0.346 shares of its stock for each share of HNC stock (about $704.5 million, based on the value of Fair Isaac stock at the time the deal was announced). After the completion of the deal, HNC shareholders will own about 35 percent of the total outstanding shares of the combined company. The deal has been approved by the boards of both companies but remains subject to stockholder and regulatory approval. The deal is expected to close in the third quarter of 2002.

Discussion: HNC Software makes analytic and decision management software which finds human behavior patterns in databases and customer transaction histories. HNC's software is used to uncover credit card fraud, automate and streamline business processes, identify sales trends, and monitor merchant risk.

Fair, Isaac and Company is a leading developer of credit scoring systems, which provide statistics-based predictive tools for the consumer credit industry. The company also provides marketing, data processing, and database management services for direct marketers and and financial risk and database management products for financial companies.

The acquisition is expected to save Fair Isaac about $35 million in annual costs. Acquiring HNC will provide savings in Fair Isaac's research and development and administrative costs.