Solera Says in Talks on Significant Acquisition

Solera Holdings Inc. (SLH), a software provider for the car-insurance claims-processing industry, said it’s in negotiations related to a “significant acquisition opportunity.”

Solera hasn’t signed any material agreement, the Westlake, Texas-based company said today in a statement. It also announced a $700 million private offering of senior notes from a subsidiary, Audatex North America Inc., which will be used to repay debt and to fund strategic initiatives or business development.

The company has been seeking to diversify its product base, Chief Executive Officer Tony Aquila said on a conference call on May 7. Solera acquired HyperQuest Inc., a software provider for the property and casualty claims market, earlier this year. The company could now be in talks with a household-claims software company, said Andrew Jeffrey, an analyst at SunTrust Robinson Humphrey.

“Tony’s been pretty clear about wanting that strategic opportunity to expand products and expand Solera’s functionality,” Jeffrey, who has a buy rating on the shares, said in an interview. “They’re looking to do something that isn’t closely tied to auto as it has been in the past.”

Jeffrey estimated Solera may spend $250 million to $350 million on an acquisition.

Following the new debt issue today, Standard & Poor’s downgraded Solera’s corporate credit rating to BB- from BB, with a stable outlook. Moody’s Investors Service also lowered Audatex’s corporate family rating to Ba2 from Ba1 and said the outlook is stable.

Solera shares climbed 4.1 percent to $54.84 at the close in New York. They have risen 2.6 percent this year, compared with a 7.4 percent gain for the Standard & Poor’s Midcap Information Technology Index.

To contact the reporter on this story: Callie Bost in New York at cbost2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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