Misys seeks bolt-on acquisitions

Mike Lawrie, chief executive of Misys, said the banking software company was continuing to look for bolt-on acquisitions, even as the group itself is in talks to be acquired by Fidelity National Information Services.

Mr Lawrie said the company was considering a bid for Kondor, the Thomson Reuters trade and risk management software business, and would look for other deals to extend the reach of its treasury and capital markets business, which is considered by many analysts to be the growth engine of the company.

The company strengthened its treasury and capital markets business at the end of last year when it bought Irish rival Sophis for £235m ($384m).

Mr Lawrie said talks with US-based Fidelity were continuing but he declined to comment on the progress of the discussions.

The company confirmed in June that it was in bid talks and investors had expected a deal to be announced by this month.

“We are running the Misys business as business as usual, and we have a lot of confidence in the business after a strong set of results,” Mr Lawrie said.

Misys reported a 4 per cent increase in revenues to £370m for the year to the end of May. This included a return to growth for the banking division, which had gained 40 customers for the BankFusion software it launched 18 months ago. Mr Lawrie is aiming for 250 customers over the next few years.

The TCM business, however, suffered a setback in the second half as a new product, Opics Plus, had to be temporarily withdrawn after problems were discovered with the software. The TCM business had grown 11 per cent in the first half, but full-year sales rose just 3 per cent.

Pre-tax profit fell 28 per cent to £32.2m as Misys faced a number of exceptional charges and fees related to the acquisition of Sophis and the disposal of Allscripts, the company’s healthcare software business, last year.

● FT Comment

Plans for more bolt-on acquisitions and solid sales growth are good to have, just in case talks with Fidelity don’t come to fruition. Misys’ valuation recently has been all about a possible take-out price, expected to be somewhere in the 420p to 450p a share range. Misys shares briefly reached 430p in June after the talks were confirmed but have drifted down since then to less than 400p as concerns have grown that macroeconomic uncertainty could disrupt the deal. At 19 times estimated earnings for next year, Misys’ valuation is fairly full. However, the revenue growth shows that its turnround strategy is finally working, and there is a sense among investors that this is a reasonable business, and even if Fidelity doesn’t buy it, someone else will.

Additional reporting by Anousha Sakoui

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