Envestnet, Inc., a leading provider of unified wealth management technology and services to financial advisors, and Yodlee, Inc., a provider of personal-finance apps to 11 of the country’s top 20 banks by assets, 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. After incorporating cash and cash equivalents of $70 million, the transaction reflects a value of about $590 million. The deal is expected to close in the fourth quarter of 2015 or first quarter of 2016.
Yodlee’s shares rose to $17.50 in early after-hours trading, up roughly 40% from the pre-acquisition price.
Yodlee was established in 1999 and powers financial applications for 99% banks in the US. Yodlee enjoys direct access to banking data, whereas other APIs rely on extracting data from banking websites. Yodlee also offers two APIs for the finance market. Aggregation API is tailored for clients who need permission-based access and bank level security to access their customers’ bank, credit card, investment and loan accounts. Instant account verification (IAV) API allows real-time verification of accounts enabling quick digital transactions. IAV API verifies more than 35,000 accounts each day.
Envestnet's end-to-end wealth management platform combined with Yodlee's data aggregation solutions will provide more value through the Envestnet platform compared to before. The combination of Yodlee's expertise and Envestnet platform will strengthen 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 finally better outputs. This is the first time when wealth management and personal finance management fields are coming together at such a grand scale and it could very well become a trend.
"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 in the press release. "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."
With the acquisition of Yodlee by Envestnet, better customer engagement and potential opportunities for increasing revenue will take place.
"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," said Bill Crager, President of Envestnet, in the press release. "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."
"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."
Information on the Strategic Rationale can be found below
Envestnet and Yodlee expect that the transaction will:
- Combine the leading wealth management technology & 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.