The courtship of Fidessa appears to have reached a final phase with a $2.3 billion bid from ION Capital U.K. Ltd.
ION Capital U.K. Ltd., which is indirectly and wholly owned by ION Investment Group Ltd., has won a key round in the battle to buy Fidessa as its $2.3 billion (£1.5 billion) bid has gotten the approval of the Fidessa board, besting a bid from Temenos.
“The boards of ION and Fidessa are pleased to announce that they have reached an agreement on the terms of a recommended all cash offer pursuant to which ION Bidco, an indirect wholly owned subsidiary of ION Investment Group Limited, shall offer to acquire the entire issued and to be issued ordinary share capital of Fidessa,” according to a message that Fidessa released to investors on April 20.
ION’s willingness to pay more than Temenos — £38.703 ($54.2835) in cash for each Fidessa share — appears to have given it the upper hand. The Temenos offer to Fidessa shareholders was £35.67 ($49.81) in cash for each Fidessa share.
“The board of Fidessa is pleased to recommend ION’s cash offer for Fidessa which is at an 8.5 percent premium to the Temenos proposal and provides our shareholders with even greater value in cash for their shares,” says John Hamer, chairman of Fidessa, in a prepared statement.
“ION shares our vision of driving workflow automation in the world’s financial markets and has a highly complementary business to ours: Fidessa is a leader in equities and derivatives and ION is a leader in fixed Income and FX [foreign exchange]. The combination of the businesses has a compelling strategic rationale and will support a well diversified mix of asset classes, geographies and products,” Hamer adds.
In particular, Fidessa officials point out that the ION offer represents “ … 48.6 percent to the closing price of £26.05 per Fidessa Share on 16 February 2018 (being the last business day before the reference date).”
Temenos & SS&C Bow Out
On April 20, the Temenos board released a statement clarifying that “it does not believe that it would be in the best interests of Temenos shareholders for Temenos to amend the terms of its offer for the entire issued and to be issued ordinary share capital of Fidessa which was announced on 21 February 2018 … Accordingly, Temenos will not be making a revised offer for Fidessa.”
“We have a very significant addressable market in the banking segment which is seeing strong growth underpinned by multiple structural drivers including digitization, regulation and the move to open banking,” says Andreas Andreades, executive chairman of Temenos, in a prepared statement. “We are the leader in this winner-takes-all market, having won all the key strategic deals, and expect our business to continue to achieve double-digit organic revenue growth annually as we pull further ahead of the competition.
“In this context, we decided it was not in the best interest of our shareholders to raise our offer price for Fidessa,” Andreades says. “I am confident we will continue delivering very strong shareholder value as we grow the business and are in an excellent position to take advantage of other opportunities to enter adjacent segments as they arise in a manner that will create exceptional value as we are doing in our core business, and capture a greater share of the IT and software spend of banks.”
The courtship of Fidessa, a trading systems vendor, included an overture from SS&C Technologies, which together with ION were initially referred to as secret suitors that put forth offers to counter the bid from Temenos.
On April 6, SS&C issued a statement acknowledging the announcement by Fidessa Group that “it has had preliminary discussions with Fidessa regarding SS&C’s interest in Fidessa. No terms of any offer have been discussed. Should an offer be made, it is likely to be in cash, although SS&C reserves the right to vary the form of the consideration. There can be no certainty that any offer will be made.”
ION and SS&C were required by law to put forth serious offers by Friday, April 20.
SS&C officials were not immediately available for comment upon the latest development.
What Fidessa Shareholders May Get
Beyond the higher price per share, the terms of the ION offer will entitle Fidessa shareholders to:
- Sell the company for £1.5 billion: “The price of £38.703 in cash for each Fidessa Share values the entire issued and to be issued share capital of Fidessa at approximately £1.5 billion on the basis of a fully diluted share capital of 39,133,650 Fidessa Shares.
- Final Dividends: “In addition, if the dividend (as defined below) is approved, qualifying Fidessa Shareholders will be entitled to receive and retain a final dividend and a special dividend in respect of the year ended 31 December 2017 together amounting to 79.7 pence in aggregate per Fidessa Share, which dividend will be paid on 7 June 2018 or, if earlier, the first settlement date in relation to the Offer following the Offer becoming wholly unconditional (the ‘Dividend’), without any reduction of the offer consideration payable under the offer.”
If all goes as planned, the aggregate entitlements of Fidessa shareholders according to the ION offer “shall be rounded down to the nearest pence,” Fidessa officials say. “In aggregate, qualifying Fidessa shareholders will receive £39.50 ($55.4170) for each Fidessa Share, comprising the cash consideration and the dividend.”
Fidessa’s trading platform products and services “cover the whole life cycle of the trading process for both the buy-side and sell-side, from low latency trading tools to settlement, compliance and risk management,” according to the vendor’s website.
Although initially thought of as a front-office vendor, the company has made many forays into the post-trade operations arena, and has been a proponent of FIX-based post-trade services.
Fidessa describes a key post-trade offering as an “industry driven utility exclusively for the ETD [exchange-traded derivatives] post-trade workflow that transforms the traditional legacy process into an automated T+0 trade confirmation workflow for buy-sides, clearing brokers and executing brokers.”
The Fidessa Affirmation Management System (AMS) is a utility “dedicated to helping buy-side and sell-side firms improve post-trade efficiency in ETDs, lower running costs and reduce operational risk,” Fidessa officials say. The AMS offering targets back-office processes via “same-day tripartite confirmation of ETD trades, reducing operational risk by giving greater surety of the trading position.”
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