Digital Transactions Authoritative, insightful and timely information for payments professionals
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S1 Corp. on Tuesday spurned a $540 million cash-and-stock buyout offer from ACI Worldwide Inc. and said it is committed to completing a proposed all-stock merger with Fundtech Ltd. valued at $700 million. ACI responded within hours, saying it remains convinced its offer, valued at $9.50 for each of S1’s outstanding shares, “is superior to the Fundtech transaction.”
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As it did July 26 when it announced its takeover offer for S1, ACI also said it is “prepared to do what is necessary to make this [transaction] happen.” The ACI statement did not elaborate. Some observers speculate the Elkhorn, Neb,-based software company will return with a sweetened offer.
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When announced last week, ACI’s offer represented a 33% premium to S1’s share price as of the previous day. If consummated, the deal would let S1 shareholders receive either cash or stock for their S1 shares, though a proration provision would result in the final price being paid 60% in cash and 40% in ACI stock. ACI said it had received a financing commitment from Wells Fargo Bank N.A. to back the cash part of the offer.
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The board at Atlanta-based S1, however, balked. “In the end, the Board determined that ACI's proposal is not in the best interests of S1 and its stockholders,” said John W. Spiegel, S1’s chairman, in a statement. “We believe that continuing to execute on our long-term business plan, which includes the business combination with Fundtech, will best help us maximize stockholder value and achieve our strategic goals.” The statement from S1 further said the company had consulted with “legal and financial advisors” in evaluating the details of ACI’s proposal.
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In the deal with Fundtech, which S1 announced in June, S1 proposes to acquire the Jersey City, N.J.-based software firm, which specializes in systems for wholesale banking, by giving Fundtech shareholders 2.72 shares of S1 common stock for each Fundtech share, leaving S1 shareholders with a 55% stake in the combined entity. The deal, which company officials expect to close in the fourth quarter, calls for the new company to be rechristened Fundtech Corp. and to be based at S1’s headquarters in Atlanta.
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By becoming part of S1, Fundtech would gain access to S1’s base of business in processing software for consumer banks and retailers. A combination of S1 and ACI, by contrast, would bring together two companies with similar product lines, including systems for electronic funds transfer switches, merchants, and banks. ACI estimates that by acquiring S1 it would boost its market share in payments software from 5% to 8%. It would also gain a foothold with retailers outside North America, extend its reach in online banking globally, and pick up a new customer base among community banks.
