Fidelity National made a “preliminary approach regarding a possible cash offer for Misys,” it said today, without giving details. An agreement may be reached in weeks, two people with knowledge of the matter said yesterday.
Misys rose as much as 2.6 percent in London trading and has jumped more than 8 percent since the company said June 21 it had received a takeover approach. The provider of software for the financial industry, with a market value of 1.4 billion pounds ($2.2 billion), would help Fidelity National reduce its reliance on the U.S., where it derives more than 80 percent of revenue.
“Much of the bid premium was already in the price,” Peel Hunt analysts Alex Jarvis and Paul Morland wrote in a note today. “While we have been expecting an uptick in bank spending on IT, we have seen little evidence to date and recent events may mean that any recovery is further delayed.”
Misys climbed as much as 10.6 pence to 421 pence and traded at 416.5 pence as of 11:02 a.m. in London. Fidelity National dropped 0.6 percent to $31.10 on the New York Stock Exchange yesterday.
Misys makes software for cash, wealth and risk management as well as for syndicated lending, over-the-counter derivatives trading and post-trade processing. It has more than 1,200 customers including Credit Agricole CIB, Nordea Bank AB and the financing arm of PetroChina Co. Ltd., according to its website.
The company is trading at 15.6 times trailing earnings before interest, taxes, depreciation and amortization. In 16 enterprise software transactions that exceeded $1 billion, buyers paid a median of 18.9 times Ebitda, according to Bloomberg data.
Misys is worth about 5 pounds a share, or a total of about 1.8 billion pounds, divided into 600 million pounds for the banking software unit and 1.2 billion pounds for the capital markets business, according to estimates by Milan Radia, an analyst at Jefferies Group Inc. in London.
U.S. software vendors such as Fidelity National and Fiserv Inc. “will be keen to internationalize their businesses,” Radia said June 21.
Fidelity National’s first-quarter revenue climbed 12 percent to $1.38 billion, driven by a 49 percent increase at the International Solutions unit, the Jacksonville, Florida-based company said May 3.
Last Year, Blackstone Group LP, Thomas H. Lee Partners LP and TPG Capital dropped a $15 billion buyout bid for Fidelity National after the company sought a higher price.
In 2006, software and technology services provider SunGard Data Systems Inc. dropped a bid for Misys after its indicative offer was not high enough, the London-based Times newspaper reported at the time.