Fundtech Surges on Deal as Mellanox Declines: Israel Overnight

Fundtech Ltd. (FNDT), the Israeli provider of banking software for Bank of America Corp. and HSBC Holdings Plc, surged by a record after GTCR Golder Rauner LLC offered to buy the company for a 33 percent premium.

Shares of the Herzliya, Israel-based company jumped 32 percent to $23.18 on the Nasdaq Stock Market yesterday, the most since the company’s initial public offering in March 1998. Fundtech led gains on the Bloomberg Israel-US 25 Index of the largest Israeli companies traded in New York, which increased 1 percent to 83.30. Alon Holdings Blue Square Israel Ltd. jumped 17 percent. Mellanox Technologies Ltd. (MLNX) retreated 2.4 percent.

GTCR, a Chicago-based private-equity firm, will pay $23.33 in cash for Fundtech shares, higher than the $17.56 closing price on Sept. 14, and will combine the company with BankServ, which operates in the same sector. Concern that S1 Corp. (SONE) will scrap its $700 million deal to buy Fundtech had pushed the company’s shares to the lowest level in nine months.

“It looks like they found their true partner,” said Alfredo Scialabba, an analyst and trader at GFI Special Situations Group in New York. “It is unlikely that S1 will come back with a match of GTCR’s proposal or a topping bid.”

Fundtech, which is among 57 Israeli companies traded on the Nasdaq, the most of any country outside the U.S. after China, is the second to receive a purchase proposal this year. Ness Technologies Inc. (NSTC), the information technology-services provider, said on Aug. 30 that its board approved the sale of the company to Citi Venture Capital International for $7.75 a share.

‘Superior’

ACI Worldwide Inc. (ACIW), based in New York, offered to buy Norcross, Georgia-based S1 for $9.50 a share on July 26, casting doubt on S1’s plans to buy Fundtech, announced a month earlier.

Fundtech notified S1 about its intention to terminate the merger agreement, and that it has five business days to make a counter proposal, the company said in a statement distributed by Business Wire yesterday.

GTCR’s offer is “superior” to the S1 proposal, Fundtech said. The transaction is expected to close in the fourth quarter of 2011 if approved by shareholders. The combined company would be headquartered in Jersey City, New Jersey, take the name Fundtech Inc. and will be headed by the current Chief Executive Officer Reuven Ben Menachem.

The company is the biggest gainer on the Bloomberg Israel- US 25 Index this year, rising 44 percent.

Transaction Fees

Fundtech will continue to thrive as banks increasingly focus on earning fees from transactions as opposed to lending, Ben Menachem said in an interview on Aug. 21. Fundtech is benefiting from sales of software to banks seeking to bolster fees on electronic payments, transfers and other transactions as lending becomes less profitable, he said.

Fundtech shares in Tel Aviv gained 28 percent to 84.38 shekels, or the equivalent of $23. Clal Industries & Investments Ltd., Israeli billionaire Nochi Dankner’s investment company that owns a 58.6 percent stake in Fundtech, climbed 9.5 percent to 15.50 shekels in Tel Aviv.

The shekel gained 1.3 percent to 3.6638 per U.S. dollar yesterday, the biggest gain since May 10, 2010. The currency has strengthened 1.1 percent in the last five days, the best performer among 10 emerging markets in Europe, the Middle East and Africa tracked by Bloomberg.

Consumer prices rose more than forecast in August as home rental costs climbed, government-regulated electricity fees increased and the weakening of the shekel helped push up import and travel prices.

Inflation

Consumer prices advanced 0.5 percent from July, the Central Bureau of Statistics in Jerusalem said yesterday. The median estimate in a survey of 14 economists by Bloomberg was 0.3 percent. The annual inflation rate was 3.4 percent, the same as in the previous month.

Electricity prices were raised in mid-August after attacks on the gas pipeline from Egypt cut off supply, forcing the use of other fuels and making power production more expensive. Diplomatic tensions with Egypt and Turkey and the prospect of the Palestinian application for United Nations membership helped depreciate the shekel, which slid about 4 percent in August, the most since January.

Israel’s TA-25 Index gained 2 percent to 1,056.83 yesterday, trimming the slump for the year to 20 percent.

Israel’s stock market was upgraded to developed market status by MSCI Inc. in May 2010, the same month the 63-year-old country was accepted to the Organization for Economic Cooperation and Development.

Mellanox, the 12-year-old Israeli adapter maker part-owned by Oracle Corp., dropped for the first time in four days, retreating 2.4 percent to $34.28. The Tel Aviv shares gained 7.1 percent to 133 shekels, or the equivalent of $36.26.

Alon Surges

Alon Holdings, the nation’s second-largest food retailer, surged to $5.54 from $4.75. The stock has jumped 22 percent in two days after dropping 33 percent during the seven sessions ended Sept. 13 as protests in Israel fueled speculation the government will take measures that will hurt the company’s profit. The Tel Aviv shares climbed 0.2 percent to 18.04 shekels, or the equivalent of $4.93.

Prolor Biotech Inc. (PBTH), the Ness Ziona-based drugmaker whose biggest shareholder is billionaire Phillip Frost, rose 2.4 percent to $4.30. The Tel Aviv shares gained 2.3 percent to 15.77 shekels, or the equivalent of $4.30.

The company reported positive results from a comparative study of its version of the hemophilia drug, which could be used for treatment of acute bleeding episodes and as therapy for prevention of bleeding, according to a statement distributed by PR Newswire yesterday.

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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