Misys shares have jumped nearly 7% as a third bidder emerged for the financial software firm.
Originally the company, including its major shareholder ValueAct, had backed a plan to merge with Swiss rival Temenos. News that Misys chief executive Mike Lawrie was leaving for another job seemed to seal the deal.
But then private equity business Vista Partners revealed it had made an approach to Misys, potentially scuppering the Temenos arrangement. There was talk that Vista was planning to offer around 360p a share.
Now ValueAct has decided to make a move of its own, and has linked up with CVC to work on a cash offer for Misys. Jeffrey Ubben of ValueAct said:
The proposed Misys and Temenos all share merger has strategic logic but after further consideration we have decided to evaluate whether we can make an alternative proposal that provides the certainty of cash upon completion.
Misys said it was talking to all the involved parties, and had formed an independent committee excluding Ubben to consider the proposals. Analyst George O'Connor at Panmure Gordon said:
In the immortal words of Harry Hill…while we like Vista's potential offer, we also like the CVC/ValueAct combo, "but which is better?" – fight.
Undoubtedly some investors were put-off by the nil premium merger between Temenos and Misys. Whilst the industrial logic of the deal may be rational, in reality, merging the pair is more likely to be a byword for cash exceptionals and missed estimates for a number of years, in our view – parking any share price appreciation. Into this scenario Vista was likely able to come lower than the normal 25%-35% takeover premium. Hence, CVC/ValueAct today could well be sabre rattling in order to get a better deal for shareholders – it is the largest. Mike Lawrie's departure is, in our view, significant in judging ValueAct's longer term intentions. In this instance, investors are likely to prefer the potential bids in the bush. We raise our target price today to 338p, from 322p, as the shares rise on the potential for a scrap. We retain our hold.
The shares have indeed risen on the "potential for a scrap", climbing 21.9p to 338p.
