Temenos to acquire Financial Objects

Temenos to acquire Financial Objects

Swiss banking system vendor Temenos has made a cash offer of 60 pence per share for London-based software provider Financial Objects.

The offer has been recommended by the Financial Objects board and 47 per cent of shareholders. The deal values Financial Objects at £27.2 million ($54.01 million) - a premium of 90% over its closing price of 31.5 pence on Wednesday.

Financial Objects reported in March that sales at its banking systems unit - which most directly competes with Temenos' core product - were down 17% in 2007.

But Financial Objects' wealth management and risk management units have performed well over the past two years, and these contributed to 40% growth in pre-tax profit for the company in 2007.

But in May, it warned that first half results for 2008 would lag the previous year because it had not been able to hire enough sales people to execute its plans.

Also in May, Temenos CEO Andreas Andreades told Finextra that the company was looking at acquisitions in the range of $20 million to $50 million, with a focus on adding customers and getting a shortcut to geographic expansion.

Financial Objects will provide Temenos with some financial institution customers in the UK - a market it has found difficult to penetrate in the past. Financial Objects customers in the UK include Abbey and building societies such as Bradford & Bingley, but in recent years it has also focused its attention on selling its banking software in southern Africa, Eastern Europe and Asia Pacific. These are all also key markets for Temenos.

The acquisition will also widen Temenos' customer base to include energy companies, who are big users of Financial Objects' energycredit risk management solution, which came to the company when it bought Raft in 2006.

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