Temenos is in advanced discussions with Fidessa about a bid that could see the Swiss-based provider of banking software acquire the UK-listed provider of trading, investment and information solutions to capital markets participants. The proposed terms of the possible offer, an all cash offer for all ordinary shares, value Fidessa at about £1.4 billion.
Temenos is known to have been looking to make a major acquisition and says it will issue a further statement when appropriate. If a firm offer is made for Fidessa, the company’s board intends to recommend its acceptance to shareholders.
While Fidessa yesterday reported positive financial results for 2017, showing revenue growth at constant currency rates up 4% on 2016 and profit before tax up 5%, the company is stuck in a slow equities market and a trading environment with declining numbers of traders. Recurring revenue in 2017 was 88% of total revenue.
For Temenos, the acquisition of Fidessa could take the company deeper into sell-side financial markets and help it expand its footprint in the US, although if and how the companies could be integrated is far from clear and could require a shift in strategy by Temenos. Recent results from Temenos show the company turning in 2017 revenue at about 1.5 times and profit at about 2.5-times that of Fidessa.
While the Temenos announcement about the possibility of a bid for Fidessa suggests discussions are close to closure, the company states: “There can be no certainty that any offer will ultimately be made for Fidessa.”