Takeover talk surrounding Misys will not go away.
The IT group is up 19.3p at 398.1p - a 5% rise in a falling market - as investors hoped that having been pared down to two divisions, banking and capital markets, it was now on the block. US groups such as Sungard, FIS and Fiserv could be interested, according to analyst Milan Radia at Jefferies, as could Indian vendors such as Infosys or TCS. HCL or Temenos are also names being mentioned, so the number of possible predators does seem to indicate a deal may take place. Radia said:
Amidst the current bout of speculation regarding a possible takeover bid for Misys, we revisit our long-held view that we are now in the final phase of the value realisation project that Mike Lawrie and ValueAct Capital embarked upon four years ago. We think the remaining two divisions are likely to be sold. We see upside of at least 20% from current levels and reiterate our Buy rating.
Misys has fully separated its core banking and capital markets divisions, perhaps indicating its willingness to sell these divisions separately. In the absence of a full bid, Misys will, in our view, seek to sell core banking first.
Despite the sustained rerating over the past few years, management value creation has kept pace and the stock remains, in our view, undervalued. Our analysis implies an increased target price of £4.60. We reiterate our buy rating.
