CheckFree Soars on Buyout

Investors in electronic payment processor CheckFree (CKFR) started Thursday with a treat when the company announced it would be acquired.

CheckFree shares soared more than 23% to $45.46, blasting through its 52-week high, on announcing that larger rival Fiserv (FISV) would pay $48 a share for the company.

The deal is worth $4.4 billion, about 10% more than CheckFree's preannouncement market value.

The news knocked CheckFree's share price out of its doldrums. The company's stock has widely underperformed the market for most of this year, losing roughly 8% of their value versus a 2% rise in the S&P 500 Index.

CheckFree has dominated the market for electronic payment processing and has maintained revenue and profit growth at a healthy clip for the past several years. It has deep client relationships with large U.S. banks such as Wachovia (WB) and PNC Bank, a unit of PNC Financial Services ( PNC ).

These relationships can expand Fiserv's base of financial services clients. Over the past two years, financial services customers have accounted for about 75% of revenue from services and processing fees, and 40% of product revenue.

The company has made several acquisitions in recent years to tack on expertise in insurance and medical services markets.

CheckFree also brings hefty client accounts in the retail sector. J.C. Penny (JCP), Home Depot (HD) and Lowes (LOW) use its electronic billing service for their customers.