The boards of Swiss banking software provider Temenos Group AG and U.K.-based trading and technology vendor Fidessa Group Plc reached an agreement on the terms of a recommended all-cash acquisition by Temenos of the entire issued and to-be-issued ordinary share capital of Fidessa for £35.67 per share in cash.
Based on Fidessa's fully diluted share capital of 39,136,739 shares, the offer values the company at approximately £1.4 billion, according to a Feb. 21 regulatory filing. The offer price represents premiums of 36.9% to Fidessa's closing share price Feb. 16 of £26.05 per share, 44.6% to the volume-weighted average share price of £24.66 for the three months ended Feb. 16, and 52.3% to the volume-weighted average share price of £23.43 for the six months ended Feb. 16.
Under the terms of the deal, Fidessa shareholders at business close May 11 would have the right to receive and retain the combined 79.7 pence per share in final and special dividends announced Feb. 19. Those shareholders will therefore receive £36.467 per share, comprising the cash consideration from Temenos and the dividends, which will be paid June 7 at the latest.
Temenos will finance the acquisition by borrowing up to £1.43 billion and plans to raise cash on the capital markets shortly after completion of the acquisition to reduce its debt. The acquisition, to be carried out by Temenos through newly incorporated wholly owned subsidiary Temenos Bidco, will be implemented by means of a court-sanctioned scheme of arrangement.
Fidessa's board, which considers the terms of the acquisition to be "fair and reasonable," intends to unanimously recommend the deal to the its shareholders.
Temenos expects the acquisition to be earnings-accretive in 2018 and in the first full year following deal completion, which is expected to take place in the first half.
"We truly believe that this powerful combination will accelerate both companies' complementary growth strategies in banking and capital markets and will enable us to cross-sell into our existing client bases and capture a greater share of the IT and software spend of banks, especially as they move to the cloud," said Temenos Executive Chairman Andreas Andreades.
N.M. Rothschild & Sons Ltd. is acting as lead financial adviser to Fidessa, while Jefferies International Ltd. is acting as joint corporate broker and financial adviser and Numis Securities Ltd. is acting as joint corporate broker. Credit Suisse is acting as financial adviser to Temenos and Temenos Bidco.