Another day and another deal in the pipeline


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The Independent Online

The big deal wagon rolled on again in the City yesterday as IT giant Misys said it was in talks over a £2bn merger deal.

Misys, whose kit is found in banks and financial services firms across the world, is discussing a deal with Swiss counterpart Temenos.

The deal followed the£50bn tie-up plans of Glencore and Xstrata, Facebook's potential $100bn flotation and Roche's hostile $5bn bid for pharmaceuticals rival Illumina.

Misys said it is "in preliminary discussions" about the all-share deal.

The FTSE 250-listed firm, led by chief executive Mike Lawrie, has been the subject of on-off takeover discussions for months, after FIS Global made an abortive approach last summer.

Analysts reacted cautiously. Misys shares, which have risen 40 per cent on bid speculation in the last six months, gained 4p to 329.6p. Initially the shares fell in disappointment that it was not a cash bid for Misys, but they later rose on hopes of a juicy bid battle.

George O'Connor, at broker Panmure Gordon, said: "It was probably someone in corporate finance who cooked this one up."

He said that Temenos wants to expand in the US, where Misys has a slim 18 per cent of revenue and "Misys wants to do 'something'."

He added: "Operationally, the phrase 'buggers muddle' springs to mind in terms of the difficulties in banging these businesses together."

Mr O'Connor rates Misys a buy because of a possible counter-bid from FIS although he is far from sure that will materialise.

Roger Phillips, at broker Merchant Securities, was also sceptical about FIS after it ended talks last summer. "FIS investor reaction was negative to the deal at the time and we think would be even worse now; hence we do not see this happening," he said.

Misys is worth £1.1bn and Temenos around £900m.

The timing of the announcement raised some eyebrows as, under Takeover Panel rules, the six-month period for which FIS had to wait before launching another bid approach ended next week.

For that reason, there had been much speculation in the City about a potential bid in recent weeks.

Misys said last month it has to make cost savings, while Temenos is also restructuring after a tough 2011.