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Thoma Bravo to Buy Financial Services Unit From Intuit

Intuit Inc. rose the most in more than two months after private-equity firm Thoma Bravo LLC agreed to buy the small-business software maker’s financial-services unit for $1.025 billion in cash.

Shares of Intuit advanced 3.5 percent to $63.15 at the close in New York, the biggest gain since April 26. Mountain View, California-based Intuit, which makes financial and tax-preparation software for small businesses and consumers, plans to use the proceeds to buy back shares, the company said in a statement today.

Intuit is seeking to diversify beyond desktop software and Web services, including QuickBooks and TurboTax, into software for tablet computers and smartphones. Intuit also plans to seek a buyer for its health unit, a Web-based service for medical providers to manage appointments and billing, it said in a separate statement. The moves will let the company sharpen its focus on its core markets, according to Brad Smith, Intuit’s Chief Executive Officer.

Banking software and tools for doctors’ offices had been “slow revenue growers and had the lowest segment margins” at the company, according to Brent Thill, an analyst at UBS AG. Thill recommends buying the shares.

Intuit’s health business, the result of its $91 million 2010 acquisition of Medfusion Inc., took a $46 million impairment charge in the fiscal third quarter that reduced the value of Intuit Health “to zero,” according to a May 30 filing with the U.S. Securities and Exchange Commission.

The business’s largest customer made an acquisition that turned it into a direct competitor, the filing said. That customer was Allscripts Healthcare Solutions Inc., Diane Carlini, a spokeswoman for Intuit, said.

Divesting Businesses

Peter Goldmacher, an analyst at Cowen & Co. who has an outperform rating on Intuit, said in an e-mail that makers of medical-practice management software could be potential buyers for Intuit’s health, which generated about $15 million in sales last year.

Thoma Bravo will establish Intuit Financial Services, which enables banks and credit unions to offer online and mobile-payment services to customers, as a separate company. The business had revenues of $305 million in the last fiscal year and is expected to generate sales of $325 million in the 2013 fiscal year, according to the statement. The Westlake Village, California-based unit has 730 employees in the U.S. and India.

Recurring Revenue

“Thoma Bravo’s acquisition of IFS is consistent with our strategy of buying great technology franchises with significant recurring revenue,” Orlando Bravo, a managing partner at the private-equity firm, said in the statement.

Thoma Bravo concentrates on investing in software, education and financial-services companies. It manages funds with about $4 billion of commitments from offices in Chicago and San Francisco.

Golder Thoma & Co., which was started by Stanley Golder and Carl Thoma in 1980, split into two firms in 1998. GTCR, the other firm, has invested more than $10 billion in more than 200 companies, according to its website.

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