(Updates with analyst comments from fourth paragraph.)
June 21 (Bloomberg) -- Misys Plc, a U.K. provider of software for the financial industry, said it received a takeover approach, sending the shares to the highest level in nine years.
The approach is “preliminary” and “may or may not lead to an offer being made for the company,” Misys said in a statement today, without identifying the potential bidder.
“This is a one-off asset,” said Milan Radia, an analyst at Jefferies Group Inc. in London. “You get such a large installed base of customers that last invested heavily in their software over 10 years ago so the upgrade potential here is enormous.”
Misys jumped as much as 12 percent and was up 8.8 percent at 418.3 pence as of 11:48 a.m. in London. The stock has gained about 40 percent in the past year, giving the company a market value of 1.4 billion pounds ($2.3 billion).
London-based Misys makes software for cash, wealth and risk management as well as for capital markets activities such as syndicated lending, over-the-counter derivatives trading and post-trade processing. It has more than 1,200 customers including Credit Agricole CIB, Nordea Bank AB and the financing arm of PetroChina Co. Ltd., according to its website.
U.S. software vendors like Fidelity National Information Services Inc. and Fiserv Inc. “will be keen to internationalize their businesses,” Radia said. Indian providers Tata Consultancy Services Ltd., HCL Technologies Ltd. and Infosys Technologies Ltd. would also be keen to get a large base of customers to sell upgrades to.
“For any credible, large-scale vendor it’s going to create some synergies for them, whether it’s geographic or license driven,” Radia said.
Fiserv or Sungard Data Systems Inc. would be the “most likely fit,” said Rajeev Bahl, an analyst at Matrix Corporate Capital LLP in London, adding that a bid from Geneva, Switzerland-based Temenos Group AG would be less likely given the current valuation of Misys.
Misys is worth about 5 pounds a share, or a total of about 1.8 billion pounds, Radia estimated, divided into 600 million pounds for the banking software unit and 1.2 billion pounds for the capital markets business.
The company is currently trading at 15.6 times trailing earnings before interest, taxes, depreciation and amortization. In 16 enterprise software transactions that exceeded $1 billion, buyers paid a median of 18.9 times Ebitda, according to Bloomberg data.
Spokespeople for Misys, Infosys, TCS and Temenos declined to comment. In 2006, Misys ended takeover discussions after failing to receive an offer.
--With assistance from Beth Mellor in London and Mehul Srivastava in New Delhi. Editors: Sara Marley, Kenneth Wong
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