Vista Equity Partners agreed to acquire Misys Plc for 1.3 billion pounds ($2.1 billion) in cash, a week after Temenos Group AG ended talks over an all-share merger with the British financial software maker.
Vista, a San Francisco-based private equity firm, will pay 350 pence a share in a deal Misys’s independent directors agreed to recommend to shareholders, the companies said today. Misys, which has jumped 42 percent this year through March 16, gained 7.4 percent to 354 pence in London.
Companies that sell financial software to businesses are proving attractive to private-equity firms amid tighter banking regulations. In August, Bain Capital agreed to buy a majority stake in Australia’s MYOB Ltd., which had also drawn a bid from Sage Group Plc. Vista, which holds assets valued at more than $6 billion, said it plans to combine London-based Misys with Turaz, a risk-management software maker it bought recently.
“This will probably be it for Temenos in this deal, I don’t think they’ll come back again,” said Andreas Mueller, an analyst at Zuercher Kantonalbank in Zurich. “The synergies would have been higher” from a combination with Temenos, he said.
While talks to merge with Geneva-based Temenos to create the largest vendor of banking software broke down earlier this month, Temenos can still make a counter offer. Andrew Hayes, a spokesman for Geneva-based Temenos, didn’t immediately return a call seeking comment.
Tom Kilroy, Misys’s acting chief executive officer, had also considered a rival bid from Misys’s largest shareholder, ValueAct Capital, which joined forces with CVC Capital Partners.
The two private equity firms said in a separate statement today that they continue to consider their options, including a possible joint cash offer for the company, and urged Misys shareholders “to take no action at this time.”
CVC and ValueAct, which initially had until April 2 to announce a firm intention to make an offer for Misys, have had the deadline extended.
The Vista deal on a multiple of 14.6 times 2011 earnings before interest, taxes, depreciation and amortization is cheaper than the average of 17.6 times for comparable deals in Western Europe in the last five years, according to Bloomberg data.
“We think this offer is likely to be the best deal available for Misys and its shareholders,” Kilroy said in a phone interview. Kilroy, who was formerly Misys’s general counsel, will step down as CEO after the deal is completed while aiming to remain with the business, he said.
“The business will be run as the business is now, combined with Turaz,” Kilroy said. Misys lost out to Vista in the prior bidding for the Turaz business last year, he said.
‘Invest and Grow’
The deal will probably close before the end of May, Kilroy said.
Credit Suisse Group AG, Jefferies Finance LLC and Bank of America Corp. unit Merrill Lynch, Pierce, Fenner & Smith Inc. arranged the financing for Vista.
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 1,300 banking customers.
Revenue fell 12 percent in the third quarter through Feb. 29, while orders dropped 18 percent, as customers delayed purchases while the company’s ownership was being decided, Misys said today.
Previous negotiations for a sale of Misys to Fidelity National Information Services Inc. collapsed last year when the two failed to agree on price, a person with knowledge of the matter said at the time.
“Through our deep experience with enterprise software companies, we believe that Misys has an attractive future that we plan to invest in and grow,” Robert Smith, Vista’s chairman and chief executive officer, said in a statement.
Goldman Sachs Group Inc. advised Vista, while Barclays Capital and JPMorgan Chase & Co. were advisers to Misys.