Fidessa/Temenos rival bid prospects hindered by candidates’ recent purchases
- Ion Trading, FIS and SS&C still seen integrating deals
- FactSet bid logical, though size a possible hurdle
Potential rival bidders for financial technology group Fidessa [LON:FDSA] may be hampered by capacity constraints and pre-occupation with already signed deals, three industry bankers following the situation said.
Activist Elliott Management disclosed a 4.8% stake in Fidessa on 21 February, following a GBP 1.4bn approach by Swiss peer Temenos [SWX:TEMN]. Elliott reportedly believes other buyers could gain greater benefits from a deal to buy the UK provider of trading technology.
The activist has been contacting a large number of advisers to find a rival bidder, the first banker said. At the top of Elliott’s list of ideal purchasers is likely to be Ion Investment Group’s Ion Trading as it can extract good synergies from a combination, this banker said. Ion provides software for financial institutions and banks.
However, Ion has recently made acquisitions that could mean another sizeable acquisition is unlikely, this banker and a second said. Ion announced a USD 1bn purchase of Openlink Financial, which provides software for trading and risk management, on 2 February.
Late last year Ion also spent an undisclosed amount on a controlling stake in financial content and analytics company Dealogic. Ion did not respond to a request for comment.
FactSet Research Systems [NYSE:FDS] is another potential bidder, the bankers said. The two companies would be complementary, with FactSet being buyside-focused and Fidessa primarily serving the sellside, the first banker said. The companies have overlapping customers and there would be a lot of cross-selling opportunities, a fourth banker said.
Factset has not done big deals in the past, and could be challenged by Fidessa's expensive valuation, the second banker said. The Temenos deal values Fidessa at 14.6x EBITDA. He added that Factset will have to decide if it wants to move into the sellside, and if it wants to pursue a large deal rather than finding a smaller target.
Factset declined to comment.
Potential bidder FIS [NYSE:FIS] is still integrating its largest purchase, financial software provider Sungard, the first two bankers said. Financial services software and services provider SS&C [NASDAQ:SSNC] announced an acquisition of DST Systems [NYSE:DST] on 11 January, and Vista Equity Partners combined major financial technology companies Misys and D+H last year to form Finastra.
Temenos seems to have timed its bid for Fidessa very well for this reason, the first banker said.
On the other hand, Fidessa has been known to be open to a sale for several years, giving other bidders ample opportunity to come forward, this banker said. More recent takeover interest in Fidessa may have been ignited by the sale of electronic trading provider Ullink in November 2017, the third banker said.
Temenos has also offered a good price for Fidessa, at a 37% premium, the second banker said. Temenos has the capacity to increase its offer, so any rival would have to be prepared for a possible bidding war, this banker said.
Temenos and Fidessa declined to comment.