Blood in the Water: ACI Makes Aggressive Offer To Acquire SI and Stop Merger with Fundtech

by Mercator Advisory Group 0

Last month SI and Fundtech agreed to a merger that would create a full service retail and wholesale banking payments company that would be a strong competitor to market leader ACI Worldwide.

This morning ACI Worldwide responded with a $540 million offer to acquire all of S1 at a 30 percent premium to S1s closing price yesterday. ACI is a leader in retail payments and over the past decade has expanded their business across the payments landscape through a number of acquisitions. S1 would provide ACI additional capabilities in the large bank cash management space and their retail payments solutions have a strong market position globally among merchants, mid tier banks, and independent payment processors.

In a letter to S1’s board ACI laid out the benefits of their proposal:

We believe the combination of ACI and S1 provides specific tangible benefits to the combined shareholders, including, among others:
• Combination of complementary products and expanded customer bases, providing a rich set of capabilities and a broad portfolio of products to serve customers across the entire electronic payments spectrum;
• The creation of an approximate $100 million in revenue hosting business serving our collective customer base with enhanced margins due to the consolidation of fixed infrastructure;
• Expanded presence in high-growth international markets and additional capabilities with respect to ACI’s retailer payments and online banking solutions;
• Substantial synergy opportunities by leveraging ACI’s established global cost structure, eliminating redundant operating expenses and consolidating our on-demand operations and facilities; and
• Strong financial profile with full year earnings accretion in 2012.

We believe that our premium stock and cash proposal is both financially and strategically superior to your proposed transaction with Fundtech. Our proposal offers substantially greater current financial value to S1 shareholders in the form of a meaningful premium to the current stock price and a clearer, more expedient path to value creation over the long-term through the realization of significant synergies, with less risk and uncertainty than the Fundtech transaction. Additionally, our proposed combination creates a more diverse, long-term shareholder base for the pro forma company.

For more information on ACI offer, read the entire press release:

Click to view a presentation that summarizes the benefits of ACI Offer:

Read coverage of the S1 Fundtech merger in Payments Journal:

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