Digital personal finance company SoFi Technologies, Inc. (NASDAQ: SOFI) has signed an agreement to acquire Florida-based digital banking platform Technisys in an all-stock deal of approximately $1.1 billion. The acquisition is expected to close by the second quarter of this year.
Anthony Noto, the CEO of SoFi, said, “The acquisition of Technisys is an essential building block in delivering on our member-centric, digital one-stop-shop experience for SoFi members and our partners through Galileo, our provider of fintech cloud services.”
The CEO of Technisys, Miguel Santos, said, “We are confident that together, we can offer a best-in-class financial experience for traditional and non-traditional financial services players alike at a greater velocity than ever before.”
Following the completion of the acquisition, Technisys will become an independent subsidiary of SoFi, with Santos continuing as CEO.
SoFi expects the acquisition to generate cost savings of $75 million to $85 million between 2023 and 2025 and around $60 million to $70 million every year beyond 2025.
About SoFi
Based out of San Francisco, SoFi provides financial products that include student loan refinancing, mortgages, personal loans, credit cards, investing, and banking through both mobile app and desktop interfaces.
SOFI stock closed almost 10% down on Tuesday but gained 4.8% in after-hours trading to end the day at $10.75.
Wall Street’s Take
After the acquisition was announced, Rosenblatt Securities analyst Sean Horgan maintained a Buy rating on the stock and reduced the price target from $25 to $22 (114.4% upside potential).
The analyst said, “We think the deal makes sense as it provides revenue expansion opportunities for Galileo’s existing clients and cost savings within SoFi’s own business.”
Overall, the stock has a Moderate Buy consensus rating based on 8 Buys and 3 Holds. The average SoFi Technologies price target of $18.59 implies 81.2% upside potential. Shares have lost nearly 50% over the past year.
The company is scheduled to announce its fourth-quarter 2021 results after the markets close on March 1.
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