Technology outsourcing and consulting major Accenture plc (ACN) recently entered into an agreement to acquire Zenta, a provider of residential and commercial mortgage processing services. However, the company did not disclose the financial details of the deal.
Accenture believes that the acquisition of Zenta will expand its capabilities, helping lenders, services and real estate investment trusts to upgrade and streamline their operations, improve customer experience and boost profitability in new markets.
Following the news of the acquisition, Accenture shares surged $1.43 (3.0%) to $48.87.
Currently, mortgage lenders are incurring huge costs related to risk management, which has forced financial institutions to bring about changes in their loan origination and servicing/loss mitigation operations. The acquisition is expected to enhance the company’s competence in the field of commercial mortgage processing.
Accenture has been continuously expanding through acquisitions over the prior year. Earlier this year, the company signed an agreement to acquire property and casualty (P&C) insurance solutions provider, Duck Creek Technologies, for an undisclosed amount. The acquisition is expected to be closed by mid August.
Founded in 2000, Missouri-based Duck Creek has evolved as a prominent P&C policy administration solutions provider in North America and the U.K. The company’s services include processing of all commercial, personal and specialty lines of businesses.
Post acquisition, Accenture will combine Duck Creek’s intellectual property with its P&C software product portfolio. Both the companies’ technologies are based on Microsoft Corp.’s (MSFT) .NET(dot net) platform, which should enable fast and easy integration. The combined platform will help Accenture offer more comprehensive software solutions and facilitate hassle-free processing of P&C claims.
Accenture reported encouraging third quarter results with both the top and bottom line outpacing the Zacks Consensus Estimates. Based on improving business momentum and market share gains, Accenture raised its revenue and earnings guidance for fiscal 2011. Moreover, we are optimistic about the steady flow of new businesses and believe that the trend will continue going forward.
Apart from this, we remain upbeat about Accenture’s deal wins from various industry verticals. We also believe Accenture’s recent acquisitions will enrich its product portfolio. However, increasing competition from IBM Inc. (IBM) may temper growth prospects to some extent.
Currently, Accenture has a Zacks #3 Rank, which implies a short-term Hold rating.
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