Information Services Corp (TSE:ISV), which provides registry services for public records, revealed on Wednesday that its wholly owned subsidiary ESC Corporate Services has executed an agreement to buy all the major assets in Paragon Inc’s business for C$70 million.
Paragon is a tech-enabled company that facilitates asset recovery on behalf of Canada's major banks. Asset recovery often takes the shape of identification, retrieval and disposition of movable assets like cars, boats, aircraft and other physical assets used as collateral in transactions.
The Saskatchewan-based firm’s stock recently traded 5.4% higher to $17.51 a share in Toronto.
In a statement, Information Services CEO Jeff Stusek said: “Paragon is a growing, complementary business that expands our services segment’s portfolio of solutions in the credit life cycle from loan origination to recovery.”
He added: “Since acquiring ESC in 2015 to diversify our business beyond Registry Operations, we have continued to increase our market share based on a reputation for excellent customer service. Our subsequent acquisitions, such as the one we are announcing today, is in response to demands from our clients to place as much of their due diligence business with us as possible, because of the trust they have in us.”
Information Services, also known as ISC welcomed new “Paragon clients and employees to the ISC family.” The company said it also “looked forward” to sharing the new solution with its existing ESC clients.
Paragon CEO William Meany said that Paragon’s technology and processes support many large financial institutions in Canada.
“Over the years we have built a strong foundation based on our technology but also our relationships and customer service,” said Meany.
“Apart from the additional solutions they will now have to choose from, our customers should be assured that going forward they will have the same great customer experience that they have enjoyed with us over the years.”
Deal will boost revenue
The acquisition is consistent with ISC’s long-term strategy of acquiring companies with symbiotic competencies or operations in its industry space.
ISC has a host of diversified, yet complementary revenue streams through its three business segments: Registry Operations, Services and Technology Solutions.
The Paragon acquisition is tipped to be “highly accretive” on both earnings per share and cash flow basis for ISC as it is a resilient business that performs in both “a recovery, or recession” environment.
For the 12 months ended June 30, Paragon clocked up revenue of $12.6 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) of around $7.1 million.
Significantly, Paragon has a track record of delivering compound annual revenue growth of around 29% between financial years 2016 to 2020.
The management will provide more details on the strategic deal on the company’s second quarter earnings conference call on August 6, at 12:00 pm ET.
The deal is expected to close on or about July 31.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive