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As Sale of Corporate Actions Specialist Xcitek Looks Likely Once More, Speculation Mounts as to Buyer

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Speculation that a sale of US-based corporate actions software and data vendor Xcitek could be imminent is mounting. The provider has been rumoured to have been seeking a buyer for some time, with talk of a sale reaching a peak around October last year. Activity seemed to have slowed in the early part of 2007, but appears to have increased again in recent weeks.

A number of potential buyers are said to be or have been in the frame to acquire the business, including Interactive Data Corporation, Telekurs Financial and SunGard. Of those, sources suggest IDC is the most likely to carry the transaction through at this stage. Xcitek, Interactive Data, Telekurs and SunGard all offer “no comment” on the rumours at this time.

One challenge for Xcitek in finding a buyer might be that its business spans both corporate actions systems and corporate actions data – as well as professional services and consulting. While the value of its data business to a data vendor is clear, whether a data vendor would be interested in its software business is less clear.

Conversely, while a software vendor might well regard the Xcitek solutions business – which, despite the market for corporate actions systems remaining relatively slow, appears to be doing reasonably well – as a useful addition to its portfolio, the corporate actions data side of its activities would potentially be a less good fit. Some sources speculate that this might lead ultimately to the business being split.

SunGard is known to have a data-related acquisition in the works currently. Following its recent acquisition of the Soliton TimeSquare business (Reference Data Review, October 2006), SunGard’s data management executives openly say they continue to look to bolster their stable by buying businesses with complementary solutions that fill any gaps in SunGard’s existing data management line-up, and a corporate actions solution would certainly do this; despite the hype in recent years around corporate actions STP, SunGard does not have an offering in this space with which to compete with players such as CheckFree (with eVent) and Tata Consultancy Services (with NCS).

A spokesperson for SunGard says it continues to make a number of strategic investments, but offers no comment on the question of an Xcitek buy specifically.

The Xcitek solution XSP would likely be a good bet for a potential buyer. Dominant in the US market, with users including Credit Suisse Asset Management in New York and Nomura Securities, XSP has been developed to meet the requirements of European financial institutions and has been deployed by a number of clients in Europe, including Mizuho International.

Xcitek is also developing a .Net version of the system which will enable the easier implementation of upgrades and patches. In addition, the vendor has kept well in line with industry level activities to improve the standardisation of corporate actions processing, accommodating ISO 15022 messaging and Securities Market Practice Group guidelines to support corporate actions STP.

Xcitek’s web-based market data offerings are also highly regarded, sources say, particularly in the US market. They cover corporate actions, municipal actions, class actions, securities payments and other financial data, and are used by 2000 institutional clients worldwide directly and through distributors. The vendor says it has been ranked number one for more than 10 consecutive years by The Summit Group, excelling in areas such as data accuracy, data timeliness, coverage and delivery reliability.

This portfolio of data offerings could prove a valuable boost to any data vendor looking to extend its coverage – though it would need to establish what it might gain from an acquisition that it could not get through a distributor agreement.
The vendor was founded in 1986, and first created its corporate actions data file that year. It picked up its first third party distributors in 1992.

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