Digital Insight Scoops Up Rival



Internet banking services provider Digital Insight Corp. announced today it will acquire rival nFront Inc. for $439 million in stock.

Digital Insight provides back-end services to financial institutions that let them offer online banking. The company also designed Axis, a product that works with the data processing systems of financial institutions in real time to allow transactions conducted on the Web site to be posted immediately.

In addition to providing online banking services for small and midsize financial institutions, nFront also offers Web-site design, maintenance and hosting, training and support, and marketing consulting services.

Upon completion of the deal, which is expected in February, the combined entity will operate under the Digital Insight name and will be headquartered in Calabasas, Calif. Tripp Rackley, nFront CEO, will become president of Digital Insight and a member of the board of directors. John Dorman will remain Digital Insight's CEO and chairman.

After the acquisition, Digital Insight stands to have a combined customer base of 645 financial institutions and more than 640,000 users of its services. Banc of America Securities analyst Bob Austrian says the deal will position Digital Insight to better compete because it is "outdistancing its competitors by getting larger" through acquisition. NFront will continue to operate out of its Atlanta headquarters and will extend its services to include mortgage origination, online trading, and insurance.

The stock-for-stock deal will include an exchange ratio of .579 Digital Insight shares for each share of nFront. Digital Insight expects the transaction to accelerate time to profitability by at least one quarter.

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