The board of Fundtech is turning its back on a planned merger with S1 after receiving a "company superior offer" from private equity firm GTCR.
Transaction banking vendor Fundtech agreed an all-stock merger with S1 in July that valued the merged entity at around $700 million. A shareholder vote had been slated for October.
However, Fundtech says it has now received a cash offer of $23.33 per share from GTCR Fund and its affiliated entities, a 33% premium on yesterday's closing price, valuing the company at around $364 million, according to Reuters data.
Fundtech says this represents a "company superior offer" under the S1 merger agreement. It has therefore told S1 of its intention to change its recommendation to shareholders, terminate the merger agreement and enter into a written definitive deal with GTCR, which has also agreed to pay the $11.9 million termination fee to S1.
GTRC plans to merge Fundtech with BankServ, a US payments technology provider acquired by the PE firm last month. The combined firm would be called Fundtech Inc, headquartered in Jersey City and led by current Fundtech CEO Reuven Ben Menachem.
Clal Industries and Investments, which holds 58% of Fundtech's shares, is set to enter a voting agreement with GTCR and the takeover could go through in the fourth quarter.
S1 has not publicly responded to the development, which comes just a day after it again urged its own shareholders to reject a hostile takeover offer from ACI Worldwide in favour of the Fundtech agreement. With that option now off-the-table, S1 looks desperately vulnerable to ACI's predatory circling.
In a brief statement, S1 says: "Under the terms of the merger agreement, S1 has five business days to make a counter proposal. S1, in consultation with its legal and financial advisors, is currently reviewing its options."