CheckFree Announces Agreement to Acquire Carreker

CheckFree Corporation (Nasdaq: CKFR) today announced it has entered into a definitive agreement to purchase Carreker Corporation (Nasdaq: CANI), significantly expanding its software business and consulting expertise, and broadening its leadership in offering payment solutions to the financial industry. Under the terms of the agreement, CheckFree will acquire all of the outstanding shares of Carreker common stock at a price of $8.05 per share, for a total purchase price of approximately $206 million on a fully diluted basis.

Through this acquisition, CheckFree will expand its presence in payments processing to play a leading role in providing processing and risk management capabilities for ACH, check and cash. It will also become a leading provider of solutions and expert consultancy for the convergence of check and electronic payments.

Carreker, headquartered in Dallas, Texas, is a leading provider of payments technology and consulting services for the financial services industry. The company has more than 250 clients in the United States, United Kingdom, Ireland, Continental Europe, South America, and Australia. It reported revenues of $116.6 million in fiscal 2005, which ended January 31, 2006.

CheckFree and Carreker will help drive innovation in the industry using a number of solutions synergies. Carreker complements CheckFree’s solutions in delivering fraud management, risk mitigation and operational excellence with a substantial potential return on investment in new technology. In addition to each company’s recognized expertise in large-scale system projects and payments application development, the combined company will also be able to leverage Carreker’s world-class payments consulting services and revenue enhancement advisory services.

"This combination will enable financial institutions and corporations to address a range of challenges, from payments convergence and more complex client requirements, to the need for operational efficiency gains and regulatory compliance," said Pete Kight, CheckFree Chairman and Chief Executive Officer. "In addition, the newly expanded Software unit will have the necessary economies of scale to innovate and support the dramatic transformations underway in financial services."

"This proposed acquisition is the positive outcome of the strategic alternatives review process that has been underway at Carreker for the past year," said John D. (Denny) Carreker, Carreker Chairman and Chief Executive Officer. "Combining our businesses will maximize value for Carreker shareholders while creating a leader in payments processing and risk management capabilities in ACH, check and cash."

The proposed acquisition combines CheckFree’s leadership in payments processing with Carreker’s expertise in check conversion — the ability to capture and process a digital image of a paper check. As a result, the combined organization will be able to convert paper checks into electronic items at the earliest possible points in the payments process — whether at the bank branch, corporate back office or lockbox. Having one provider for these and other capabilities will provide strong value to financial institutions and corporate customers.

The transaction also reaffirms CheckFree’s commitment to global growth as it significantly deepens CheckFree’s relationships with the world’s largest financial institutions and further expands CheckFree’s global presence into new geographic regions. Together, the combined organization will also serve substantially all of the top 100 U.S. banks, creating additional opportunity for CheckFree’s existing solutions.

The proposed acquisition is subject to regulatory review, Carreker shareholder approval, and other customary closing conditions, and is expected to close by March 31, 2007. CheckFree will finance the transaction with a combination of existing cash balances and revolving debt, although there are no financing contingencies in the merger agreement. The transaction is expected to be modestly dilutive to CheckFree’s underlying earnings per share in the current fiscal year (ending June 30, 2007) and in fiscal 2008, and dilutive to GAAP earnings per share in each of 2007 and 2008. The company plans to share specific financial details when the transaction closes.