Misys to sell Sesame stake to management; strips back costs

Misys to sell Sesame stake to management; strips back costs

Troubled banking-to-healthcare software firm Misys is to sell a 60% stake in IFA division Sesame to management under a major restructuring programme that will also see the firm strip back costs across the business and re-invest in key products.

Under the proposals Misys plans to cut £145 million in costs over the next four years, chiefly through the consolidation of real estate and development sites and the re-allocation of resources to more productive businesses. The group will also re-invest £70 million to upgrade its product set during the same timeframe.

Speaking at the company's annual meeting in October last year Misys chairman Dominic Cadbury admitted that the firm's technology was not good enough to compete with products from more leading edge competitors.

Analsyst have questioned whether the £70 million investment will be sufficient for the firm to claw back ground lost to competitors such as Temenos and i-flex in its core banking software markets.

Announcing the overhaul Misys chief executive said: "There is no quick fix and the turnaround process will take 3-5 years."

The sale of the Sesame stake, although welcomed by the City, will result in a loss of £50 million. The give-away deal - Misys is leaving £105 million in cash in the business, while Sesame management shell-out £90 million in installments over ten years - will also take £350 million a year out of group revenues and reduce earnings per share by between one and two percent.

Shares in the vendor see-sawed in early morning trade before settling at 233.75 pence, 7.5 pence or 3.1% down on the previous day's close of 241 pence.

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