After months of brushing off overtures from ACI Worldwide Inc., S1 Corp. on Monday, Oct. 3, acquiesced to a sweetened offer of roughly $520 million in cash and stock.

The agreement ends a months-long tussle among four providers of electronic services to banks. The S1-ACI deal comes two and a half weeks after S1 was abandoned by its earlier suitor, Fundtech, which instead joined forces with BankServ, a portfolio company of private equity firm GTCR LLC. GTCR paid $388 million in cash to combine Fundtech with BankServ, despite the target's previously announced merger with S1. Meanwhile, ACI had been trying since late July to woo S1 away from Fundtech and finally prevailed with its increased offer.

The fierce competition for partners among the four companies underscores the increased pressure on banks and retailers to handle the growing volume of payments more efficiently.

Under the latest transaction, which has been approved by the boards of directors of both companies, ACI of New York will acquire S1 of Norcross, Ga., for a blended value of $9.55 per share as of Friday, consisting of $6.62 per share in cash and 0.1064 shares of ACI common stock, assuming full proration. The accepted offer represents an increase of 42 cents per share in cash from ACI's previous bid.

"We are pleased to have reached this agreement with S1, and believe that together we will create a leader in the global enterprise payments industry," ACI president and chief executive Philip Heasley said in a statement. "The combined company will have enhanced scale, breadth and additional capabilities, as well as a complementary suite of products that will better serve the entire spectrum of financial institutions, processors and retailers."

For S1, the increase in the offer proved persuasive.

"With the significant improvements in the transaction terms and conditions, S1's board of directors unanimously concluded that combining with ACI is in the best interests of S1's stockholders, as it provides a substantial premium for their investment and the opportunity to participate further in this powerful combination," S1 chairman John Spiegel said.

ACI anticipates that with S1 it will achieve annual cost synergies of roughly $30 million. In addition, the increased global scale and expected cost savings are expected to generate margin expansion. The transaction is expected to be accretive to full-year earnings in 2012, and the deal is expected to close in the fourth quarter.

ACI has received fully committed financing for the cash portion of the transaction from a syndicate of banks led by Wells Fargo Bank NA.

Wells Fargo Securities is ACI's financial adviser, with Jim Broner leading the team. ACI took legal counsel from a Jones Day team led by Bob Profusek and including Thomas Bark, Joe Sims, Kathy Fenton, Craig Waldman and Candy Ridgway.

Led by Jim Bunn, Raymond James & Associates Inc. is S1's financial adviser, and Hogan Lovels US LLP its legal adviser, with Dan Keating in Washington leading the team.