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Vista secures Misys backing for $2B bid

by Laura Board in London | Published March 19, 2012 at 9:15 AM

Vista Equity Partners Monday, March 9, struck a £1.27 billion ($2 billion) takeover agreement for financial services software maker Misys plc and attempted to lock out competing suitors CVC Capital Partners and ValueAct Capital Partners LP.

The San Francisco technology investor will offer 350 pence per Misys share and wants to conduct the takeover through a so-called scheme of arrangement, which requires the backing of 75% of the stock voted at a special meeting.

Significantly, Schroder Investment Management Ltd. and Threadneedle Asset Management Ltd. have agreed to tender their combined 21.8% holding and that agreement will be binding unless a competing bidder trumps Vista's offer by 10% or more.

CVC and San Francisco hedge fund ValueAct, which itself holds about 20% of Misys, noted Vista's announcement.

"CVC and ValueAct continue to consider their options in respect of Misys, including a possible recommended joint cash offer for the company and urge Misys shareholders to take no action at this time," they said.

Ben Foster, spokesman for the bid partners, declined to comment.

Vista and Misys reached the agreement a week after Misys's original suitor, Temenos Holding AG, a Geneva-based rival, walked away.

Vista wants to combine Misys with trading and risk-management software portfolio company Turaz, which it acquired in January from Thomson Reuters for between $600 million and $650 million.

"Through our deep experience with enterprise software companies, we believe that Misys has an attractive future that we plan to invest in and grow," said Vista chairman and CEO Robert F. Smith in a statement.

Misys is currently led by acting CEO and general counsel Tom Kilroy, after long-term CEO Mike Lawrie quit last month.

"Misys will become part of a family of enterprise software companies that together form one of the largest software groups in the world.," said Kilroy in the statement.

The Vista bid is 32% more than Misys's closing price on Feb. 2, just before it announced discussions about a merger with Temenos. ValueAct had initially backed the Misys/Temenos all-share merger before switching its allegiance to CVC Capital Partners.

Founded in 1979, London-based Misys makes software for more than 1,300 customers in the financial services industry, including the world's 50 largest banks. In the year ended May 2011, it earned adjusted operating profit of £72 million on revenue of £370 million. Last year it held unsuccessful takeover talks with Fidelity National Information Services Inc., of Jacksonville, Fla., about an offer for Misys reported to be worth £1.4 billion.

Misys stock was up 28.2 pence at 357.7 pence by early afternoon on Monday, as investors bet the bidding will escalate, despite suggestions in press reports that ValueAct's participation in the bidding had been primarily designed to bolster its exit proceeds.

Goldman, Sachs & Co.'s Gregg Lemkau, Nick Harper and Nicholas van den Arend are advising Vista.

Barclays Capital's Matthew Smith, Michael Carter and Erik-Jaap Molenaar are advising Misys, along with a J.P. Morgan Cazenove Ltd. team including Andrew Hodgkin and Mark Breuer. An Allen & Overy LLP team led by George Knighton is Misys' legal adviser.

CVC is taking advice from a Deutsche Bank AG team including Guy Hume, Anthony Parsons, Charles Wilkinson and Charles Bryant. A Moelis & Co. team is assisting ValueAct.

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