Fundtech buys Germany's Prang; posts flat Q4 earnings

Fundtech buys Germany's Prang; posts flat Q4 earnings

US e-payment processor Fundtech has acquired Prang, a Frankfurt-based provider of payments software, for a maximum consideration of EUR8 million in cash.

Founded in 1991, Prang's payments technology runs on the IBM iSeries platform, with over 50 installations in Germany and other international markets. The Swift-accredited technology is used by banks including ANM Amro, Credit Suisse and Svenska Handelsbanken.

Under the terms of a definitive agreement, Fundtech will pay EUR4 million in cash at closing and a further EUR4 million in cash over the next four years, based on the financial performance of Prang.

Fundtech says the Prang business will extend its market reach in the single euro payments area (Sepa), which will be introduced in 2008.

Commenting on the acquisition Reuven Ben Menachem, CEO of Fundtech, says: "Prang complements our European strength in terms of market knowledge, management skills and a strong drive to understand and address our customers' needs."

Dieter Prang, founder and CEO of Prang, adds: "The new Sepa regulations have created a need for advanced technology and domain expertise that Fundtech and Prang possess."

Fundtech says the Prang business reported un-audited revenues of EUR2.5 million for the twelve month period ended December 31 2006. The US vendor expects the acquisition to be neutral to EPS in 2007, excluding non-cash charges to amortise certain acquired intangible assets.

News of the acquisition come as Fundtech reports a 17% increase in fourth quarter revenues to $23.1 million, compared to $19.8 million in Q4 2006.

But the vendor's Q4 net income remained flat at $1.6 million as costs ate into earnings. Excluding stock-based compensation, amortisation of intangibles and amortisation of capitalised software costs, Fundtech's Q4 net income was up to $3 million, compared with $2.3 million in Q4 2005.

However the vendor says for the full-year ended 31 December, 2006, revenues increased 15% to $85.5 million from $74.5 million in 2005, which is the highest revenue level in its history. But costs continued to weigh down earnings, with the vendor's GAAP net income down to $3.8 million, compared with $4.3 million in 2005.

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