Fair Isaac, Buys HNC For $810 Million

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Fair Isaac and Company will acquire decision technology vendor HNC Software Inc. for $810 million in Fair Isaac stock, the two companies said yesterday. HNC Software, San Diego, provides programs that are used in the credit card and insurance industries to detect fraud. Since last year's terrorist attacks, the company has been looking to identify high-risk passengers with a company that installs information systems for airlines.


Fair Isaac, San Rafael, CA, said the addition of HNC's fraud-detection technology will strengthen its FICO credit-scoring system used by lenders to determine consumers' credit. According to Fair Isaac, credit scores based on its system are a factor in three-quarters of all mortgages approved in the United States.


Under the deal approved by the boards of both companies, HNC stockholders will receive 0.346 of a Fair Isaac share for each share of HNC. HNC stockholders will own 35 percent of the total outstanding capital stock of the merged company.


The transaction value of $810 million is based on the 64.09 closing price of Fair, Isaac stock on April 26.


The combined companies will operate under the Fair Isaac name. Two directors from HNC will join Fair Isaac's board, which will bring the total number of board members to nine. Thomas Grudnowski, Fair Isaac's chief executive, will remain as CEO of the combined companies.


The companies expect the transaction to be tax-free to shareholders and to close in the third quarter, subject to regulatory review.


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