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HNC to Buy CompReview for $200 Million in Stock

TIMES STAFF WRITER

A pair of Orange County entrepreneurs added fat strings of zeros to their net worth Tuesday as they agreed to sell their medical billing software company to a San Diego software firm in an all-stock deal that could top $200 million.

“We’re very excited,” said Lee Kaaren, co-founder of CompReview Inc., a Newport Beach company being acquired by HNC Software Inc. “This is a good step for us and for our employees.”

CompReview develops and markets software that enables insurance companies, businesses and medical billing firms to screen workers’ comp bills for fraud and compliance with various state regulations.

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Kaaren declined to comment further on the deal, which will make him and partner Michael Munayyer 20% owners of publicly traded HNC.

HNC said it will acquire privately owned CompReview for 5 million shares of stock. HNC shares closed Tuesday at $42.13 in heavy Nasdaq trading, up $4.25 on word of the deal.

The actual value of the acquisition will be based on HNC’s stock price when the sale closes in the fourth quarter, but it cannot fall below $130 million, said Raymond L. Thomas, HNC’s chief financial officer.

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CompReview was founded in 1988 by Kaaren, a physician, and Munayyer, an executive in the workers’ compensation insurance field. The company is expected to post $24 million in sales this year.

HNC will operate CompReview as a separate operating unit under its own name.

HNC, which posted a $6.4-million profit on sales of $54 million in 1996, is a major developer and marketer of software for screening credit purchases for fraud.

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