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Temenos and Misys close to merger

Banking software companies reach agreement on several important terms which may lead to all-share merger

Swiss banking software firm Temenos and larger UK rival Misys said on Tuesday they have agreed on several key terms on a possible all-share merger that could create one of the world’s largest standalone financial software companies.

Under the agreement, 4.1 Misys shares would be exchanged for each Temenos share, leaving Misys shareholders with 53.9% of the combined group and Temenos shareholders with 46.1%. This is after accounting for outstanding options but excludes the possible conversion of Misys’ convertible bond.

“It is expected that the combination will yield significant cost savings and operational synergies through scale efficiencies and cross-selling opportunities,” the groups said in a statement.

Temenos chief executive Guy Dubois will take the CEO role in the combined group, with Temenos chairman Andreas Andreades chairing the company. Misys CEO Mike Lawrie will be leaving the group.

Lazard is lead financial adviser to Temenos, with Morgan Stanley as financial adviser, while Barclays Capital is lead financial adviser to Misys and JP Morgan Cazenove is acting as corporate broker and financial adviser.

On Friday, the groups were reported to be in talks about an all-share merger in response to weak demand from their customers, six months after another suitor dropped a bid for Misys.

The British company, which sold its healthcare software unit in 2010, was in talks with Fidelity National Information Systems six months ago, but the US group walked away after Misys said its offer was too low.

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