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June 22, 2011 9:35 pm
FIS Global, the US listed payment services provider, has made the preliminary bid for UK software company Misys, according to people familiar with the situation.
Misys, which provides software for banks, said on Tuesday that it had received a preliminary bid approach, following recent speculation, and while it declined to name the bidder, its share price rose nearly 9 per cent giving it a market value of $1.4bn.
Talks over the possible offer – which would be for the whole of the business – are progressing and could be resolved within a month. However, the terms of the US provider’s bid are still unclear and Misys warned on Tuesday that the approach “may or may not lead to an offer being made”.
FIS has lined up Bank of America Merrill Lynch and Deutsche Bank to advise it, while Misys is being advised by Barclays Capital and JPMorgan, according to the people.
All parties involved declined to comment.
FIS, which is also known as Fidelity National Information Services, is based in Florida and provides core banking technology and card payments processing to banks. For example it processes some foreign exchange payments for the UK Post Office.
It was formerly a subsidiary of Fidelity National Financial, but was spun off into a separate, publicly traded and NYSE-listed company in 2006.
FIS had revenues of $5.27bn in 2010 and net earnings of $404.5m, dwarfing Misys, which had revenues of £782m last year. FIS has a market value of $9.57bn, compared with £1.4bn for Misys.
FIS is no stranger to large acquisitions, having bought Metavante, a Milwaukee-based banking technology company, in 2009 in a $2.94bn stock deal. Last year it made a smaller purchase of Capco, a banking technology consultancy.
Last year it became the subject of a potential takeover itself, as US buyout groups Blackstone, Thomas H Lee and TPG considered a $15bn approach.
However, the talks broke down over price, in the wake of the Greek debt crisis. Instead, FIS repurchased $2.5bn of its common stock in 2010 in a leveraged recapitalisation.
Analysts on Tuesday said an offer for Misys could reach 500p a share, implying a £1.8bn value. At more than 20 times next year’s expected earnings, this makes Misys more expensive than peers such as Temenos, the Geneva-headquartered software company, at 16 times forecast earnings.
FIS had cash of about $384.1m at the end of March this year, and about $5bn in outstanding debt.
Shares in Misys closed down 2 per cent on Wednesday at 410.4p, a 40 per cent increase year on year. FIS Global, whose shares are listed on the NYSE, were trading at $31.10 late Wednesday, up 15 per cent year on year.
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