S1 agrees to kill Fundtech deal; warns off ACI

S1 agrees to kill Fundtech deal; warns off ACI

S1 Corporation has backed out of its merger agreement with Fundtech after receiving an $11.9 million termination fee but insists it is still not interested in a takeover by ACI Worldwide.

Fundtech and S1 agreed an all-stock merger in July, with a shareholder vote slated for October. However, yesterday the former revealed that it has received a cash offer of $23.33 per share from private equity firm GTCR, a 33% premium on the previous day's closing price.

Judging the new bid a "company superior offer", Fundtech informed S1 of its intention to change its recommendation to shareholders, terminate their merger agreement and enter into a written definitive deal with GTCR.

S1 was given five days to return with a new offer but has agreed to kill the merger deal in exchange for a termination fee of $11.9 million, paid by GTCR.

Fundtech will now set up a shareholders meeting in the coming days to seal the acquisition in the fourth quarter. It would then be merged with BankServ, a US payments technology provider acquired by the PE firm last month. The combined outfit would be called Fundtech Inc, headquartered in Jersey City and led by current Fundtech CEO Reuven Ben Menachem.

However, despite the setback, S1 insists it will not now turn its attentions to ACI Worldwide, which has embarked on an aggressive campaign to thwart the Fundtech deal and buy S1 itself.

Says a statement: "Despite today's announcement, S1's Board of Directors has not changed its recommendation with respect to ACI Worldwide's conditional exchange offer announced on August 30, 2011. The S1 Board of Directors firmly believes that the exchange offer is NOT in the best interests of S1 or its stockholders and recommends that S1 stockholders NOT tender their S1 shares pursuant to the exchange offer."

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