Misys agrees £375m Sophis acquisition

Misys agrees £375m Sophis acquisition

UK fintech vendor Misys has agreed to buy capital markets software provider Sophis from private equity firm Advent International in a deal worth around £375 million.

Misys will buy Sophis for an equity value of £235 million but also takes on net debt of £140 million giving the acquisition an enterprise value of £375 million. A further £5 million will be payable on closing, subject to performance.

Sophis claims more than 130 clients around the world - including Barclays Capital, BNP Paribas, HSBC, ING and RBC - for its technology. It provides cross-asset, front-to-back-office securities trading systems, with a particular focus on portfolio and risk management.

The company, headquartered in Dublin with around 360 staff, reported revenue of EUR74 million and operating profit before interest and tax of EUR30 million in the year ended 31 December 2009.

Misys is financing the deal through the sale of part of its remaining shareholding in healthcare business Allscripts, new credit facilities and a new convertible bond.

The British company says Sophis's buy-side systems complement its sell-side strengths and claims the deal makes it the number one application software and services provider in capital markets.

Mike Lawrie, chief executive, Misys, says: Sophis's solutions are highly complementary to our existing treasury and capital markets solutions. We are delighted with the strength of the Sophis management team that will be joining us. Sophis has considerable financial strength and will be significantly accretive to our earnings per share in our next financial year, to 31 May 2012."

The acquisition, subject to Misys shareholder approval, is expected to be completed before the end of February 2011.

Separately, Misys has revealed tender offer terms for the return to shareholders of £670 million of proceeds from the sale in August of Allscripts shares, with a price range of 270-310 pence per Misys share.

Finextra verdict So, Mike Lawrie moves to fatten up the firm's relatively healthy trading and capital markets division. By contrast, the banking unit - which has proved a drag on Misys' performance of late - remains starved of affection. Could it be that Lawrie is paving the way for another spin-off, with the likes of Temenos, Oracle and even SunGard waiting in the wings? We think that Lawrie will bide his time to see the market reaction to the banking division's new BankFusion strategy. Whatever the outcome, another sell-off is surely on the horizon.

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