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Misys, the British fintech group, is to be merged with DH Corp, a Canadian rival, as its private equity owner attempts to create a leading provider of financial software.
Vista Equity Partners, the US private equity group that owns Misys, has beaten rival buyout group Advent International to acquire the Toronto-listed company in a deal worth C$4.8bn (US$3.6bn) including debt.
The C$25.50 a share cash offer represents a premium of 36 per cent to the D+H share price in early December, when it said it was exploring strategic options.
Brian Sheth, president of Vista Equity Partners, said: “Together, Misys and D+H have the promise to shape and lead the future of financial software.”
The combined company will have US$2.2bn in revenue, about 10,000 employees, and more than 9,000 customers across 130 countries, including 48 of the top 50 banks.
The Austin, Texas-based group will delist and combine DH Corp, better known as D+H, with Misys in an effort to build a larger global fintech group ahead of a renewed attempt to list the UK company, said a person with knowledge of Vista’s strategy.
Nadeem Syed, chief executive of Misys, said: “By coming together, we have the opportunity to create a global fintech leader, positioning us to lead the corporate banking software space, accelerate our cloud-based offerings, and expand our footprint in North America.”
DH was founded in 1875 as a bookbinding company called Davis & Henderson before it carved out a role as a cheque printer in the 1960s, a business that still accounts for a large portion of its profit. The Canadian company has grown into a diversified fintech group through a series of acquisitions in the past decade.
In addition to Vista and Advent, other private equity groups have expressed interest in DH, including TPG, Cerberus Capital Management and Thoma Bravo, according to one person briefed about the negotiations.
DH hired Credit Suisse and Royal Bank of Canada last year to initiate a “strategic review” after it was approached by a third party about a potential deal.
According to one person, Vista prevailed in the race as DH thought that a combination with Misys made greater strategic sense for the company.
Vista, founded by former Goldman Sachs banker Robert Smith, has emerged as one of the most successful acquirers of software companies in recent years.
A Vista fund launched in 2011 generated a 21.4 per cent net internal rate of return as of September 30 last year, according to data from the Oregon Investment Council.