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July 2 (Reuters) - Fiserv Inc (FISV.O), a provider of IT services and systems to the financial sector, agreed to sell a 51 percent stake in its insurance businesses to private equity fund Trident IV for $205 million in stock, sending its shares up as much as 7 percent.
Trident, which is managed by Stone Point Capital, will also assume $335 million of debt as a part of the deal that is expected to close this month. Stone Point mainly focuses on investments in global insurance and financial industry.
Fiserv will retain a 49 percent equity interest in the business.
The company, which sees the deal hurting its 2008 earnings by 2 cents to 3 cents a share, reaffirmed its 2008 adjusted earnings per share view of $3.28 to $3.40 from continuing operations.
The sale should be beneficial as the insurance businesses have been a drag on Fiserv’s organic growth and margin expansion, J.P. Morgan Securities said in a note to clients.
The company will be able to focus more on core financial institution services and integrating the CheckFree acquisition, which is a compelling transformational deal, the brokerage added.
Fiserv acquired CheckFree Corp last December for $4.4 billion in an effort to expand its customer base among large financial institutions.
In a separate statement, the company said its board had approved a buyback of up to 10 million shares, or about 6 percent of the company’s common stock.
Fiserv shares were up about 6 percent at $47.82 in morning trade on Nasdaq. They touched a high of $48.44 earlier. (Reporting by Amiteshwar Singh in Bangalore; Editing by Himani Sarkar)