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Secret negotiations over terms of deal
CEO Reuven Ben Menahem. To be appointed chief of merged company

GTCR acquires Fundtech for $388M

IT services company's agreement to acquisition nullifies merger deal with S1. Deal reflects $23.33 value for Fundtech share

Clal Industries, holder of Fundtech's controlling interest, has decided to accept GTCR's bid to acquire the IT services company for $388 million at a 33% premium.

 

Calcalist learned that Clal Industries directorate is expected to vote aye on the offer within a few days. Citibank was advisor to Fundtech curing negotiations with GTCR.

 

Furthermore, Calcalist has learned that Fundtech's directorate already received an offer from GTCR several weeks ago and the two have been secretly negotiating over the terms of the deal, namely the price.

 

Clal Industries directorate has been conducting investigations to determine whether GTCR could finance the acquisition.

 

If the acquisition comes to fruition, Clal Industries will receive its relative share (58%), which is $205 million, meaning that profits before taxes will be NIS 412 million (about $110 million).

 

Once the acquisition agreement is signed, Fundtech's directorate cannot change its recommendation in favor of the acquisition, although it will still maintain the right to consider alternative offers.

 

Deal's aim: Merger with BankServ

GTCR is a private equity fund, which through the acquisition aims to merge Fundtech with US provider of banking and payment technology BankServ to form a leading global bank clearing system company.

 

BankServe believes that it will be able to complete the deal by the end of 2011. If the two companies do indeed merge, Fundtech CEO Reuven Ben Menahem will be appointed chief of the merged company.

 

BankServe President and CEO Dave Kvederis said, "We see the merger as an opportunity to expand our product line and upgrade our positioning in global banking."

 

Once the acquisition agreement is signed by both parties, it will include a termination clause providing a $75 million penalty payment to Fundtech in the event of termination of the agreement.

 

In the event that Fundtech decides to withdraw from the merger, it will pay a $17 million penalty. The agreement is subjected to approval by the US Antitrust Authority.

 

Fundtech advised S1 of its directorate's intention of changing its recommendation to the company's shareholders, in which it recommends against the merger with S1. This give S1's directorate five days to counteroffer GTCR's offer.

 

GTCR to pay S1's compensation

Fundtech, developer of global transaction banking solutions had signed only in the end of July a merger deal with S1. According to the deal's value, the merger was expected to form a company with a $700 million valuation.

 

The merger agreement between S1 and Fundtech included a termination clause in the event that one of the parties decide to pull out of the deal. Now, under the terms of the said agreement GTCR will have to pay S1 $12 million, through Fundtech; however, the penalty does not cut into Fundtech shareholders' proceeds.

 

Just this week, S1 decided to postpone the vote on the merger with Fundtech by a month. The original date for approval was set for next week.

 

Several months ago, Fundtech rejected an unofficial tender offer from Oracle, which aimed to acquire Fundtech at $25 per share.

 

Last Wednesday, after the closing bell on Wall Street, ACI prompted S1 shareholders to reject the merger with Fundtech on the grounds that it can offer S1 much better terms for a merger.

 

Click here to read this report in Hebrew

 

 


פרסום ראשון: 09.15.11, 15:01
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