InfoSpace, an SEO service company has announced that it has signed an agreement to acquire TaxACT, an online tax solutions provider, for $287.5 million in cash. The company also states that the acquisition is expected to close in the 2012 first quarter.
The transaction is expected to be immediately accretive to InfoSpace earning per share and year one return on shareholder capital is expected to increase by 16% as per the company officials. Based in Cedar Rapids, Iowa, TaxACT is the second largest provider of online tax solutions. With approximately 70 full-time employees, TaxACT participates in the large and growing $20 billion tax preparation market. The Company had more than five million tax filers last season, with the vast majority of those customers filing online.
InfoSpace will fund the acquisition through cash on hand and debt combination and has secured a commitment of $95 million already of financing in connection with this transaction resulting in having a combined balance sheet with estimated cash and short term investments in excess of $90 million.
According to the company, upon completion of the acquisition, 2nd Story Software, the operating company for the TaxACT business, will become a wholly-owned subsidiary of InfoSpace, and will continue operations in Cedar Rapids, Iowa as a standalone business unit led by the TaxACT management team. TA Associates, the majority shareholder of the TaxACT business, will sell its full holdings as part of this transaction.