Misys, the financial software provider, is poised to acquire Irish rival Sophis for £235m with funds from the disposal of Allscripts, its healthcare arm.
A 10th of the proceeds from the Allscripts sale will help finance the deal, while the remaining 90 per cent will go towards a $1bn (£620m) share buy-back.
The acquisition of Sophis values the risk management software supplier at £375m, including net debt of £140m. The move will strengthen Misys’ treasury capital markets unit, considered by analysts to be the most important part of its business.
Analysts said they expected sales at Misys’ treasury and capital markets division to rise 40 per cent following the acquisition, and earnings before interest and tax to rise 60 per cent.
Misys said the acquisition, which is to be completed in February, would provide up to £50m in revenue synergies thanks to the Sophis software, which allows financial institutions to manage portfolios that trade across different assets.
Mike Lawrie, chief executive, said: “Sophis’ solutions are highly complementary to our existing treasury and capital markets solutions.”
Following the disposal of Allscripts, the company will focus on providing financial services groups with a range of software that can be tailored for different divisions, such as retailing banking or capital markets, Mr Lawrie said.
He added that the company was open to further acquisitions that fit with Misys’ existing financial services products.
While Allscripts generated the majority of Misys’ £782.3m revenue in the year to May 31, analysts and investors praised the sale as simplifying the company’s structure that had until then been divided between banking and healthcare software.
The group now focuses on treasury capital markets and core banking. But it has seen a growing disparity between the performance of the two divisions.
For the first quarter of this year, which ended on August 31, revenue from its treasury capital markets operations rose 5 per cent, compared with a 5 per cent decline in sales from its banking unit.
Shares in Misys slipped 5.4p to 290.1p.
The company said on Friday it would return £670m from the sale of Allscripts to shareholders through the share buy-back, whose tender offer would be priced between 270p and 310p a share.