S1 and Fundtech Merge

by Mercator Advisory Group 0

In an all-stock merger with a combined value of some $700 million, S1 and Israel-based Fundtech have merged. S1 brings strong payments and online banking strength and Fundtech brings strong banking back office capabilities. The combined business is no doubt gunning for ACI Worldwide, itself a company valued at $1 billion.

Operating under the Fundtech name, the new company will be headquartered at S1’s base in Atlanta, Georgia. Fundtech CEO Reuven BenMenachem will serve as executive chairman while his counterpart at S1, Johann Dreyer will act as chief executive. Each firm will have four directors on an eight-member board.

The two say their combination will create a global leader in transaction banking. S1 already claims over 3000 clients in around 75 countries while Fundtech says it has around 1000 customers for its payments, settlement and cash management software.

While the merger has some overlap in corporate cash management and online business banking, the addition of Fundtech’s wholesale payment capabilities fills out the SI product suite and opens a number of cross-selling opportunities in both customer sets going forward. One of the challenges for the combined operation will be focus, as their prime competitor ACI is aggressively marketing its new generation Agile Payment suite with its partner IBM. This should turn up the heat in the kitchen as they both battle to capture the emerging market for a new generation of payment systems built around an integrated payment hub.

For more information on the announcement, visit the investor relations page on S1’s website for the announcement presentation: http://investor.s1.com/phoenix.zhtml?c=77921&p=irol-irhome