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Misys, Temenos end merger talks

by Laura Board in London | Published March 12, 2012 at 9:19 AM

U.K. financial services software maker Misys plc and Swiss peer Temenos AG Monday, March 12, announced the end of merger talks after two competing private equity bidders threw their agreed deal off course.

The companies had on Feb. 7 struck an outline, all-share merger agreement which would have given Misys shareholders 53.9% of an enlarged, Geneva-based company and Temenos's executives management control. But the deal appeared unpopular from the outset, with investors marking both sets of shares down and analysts pointing to integration risks.

Vista Equity Partners and CVC Capital Partners in conjunction with 20.2% Misys shareholder ValueAct Capital Partners LP on Feb. 20 and March 5, respectively, said they were working on separate bids for Misys. ValueAct had originally backed the Temenos transaction before changing allegiance.

Under Takeover Panel rules, Temenos is now barred for bidding for Misys for six months under most circumstances, though it reserved the right to rejoin the fray if permitted.

Vista has until March 19 to produce a firm offer for Misys or retreat, unless granted an extension, while CVC/ValueAct have until April 2.

Misys shares fell 8.3 pence, or 2.4%, to 332.7 pence on Monday morning in London, giving it a market value of £1.1 billion ($1.7 billion billion). The Vista proposal was worth around 360 pence per share, or £1.2 billion, whereas Fidelity National Information Services Inc., of Jacksonville, Fla.., last year held unsuccessful talks about an offer for Misys reported to be worth £1.4 billion

Temenos shares in Zurich on Monday morning were down Sfr0.60, or 3.7%, at Sfr15.60, which is equivalent to a market value of just over Sfr1.1 billion ($1.2 billion).

Founded in 1979, 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.

Temenos took advice from Lazard's Cyrus Kapadia, Giles Corner and Rolf Bachmann, as well as Morgan Stanley's Sumit Pandey.

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.

Vista is taking advice from Goldman, Sachs & Co.

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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