Misys shares surge as Lomax considers £1bn-plus buyout plan

Kevin Lomax, the chief executive of Misys, is thought to be behind the drive to take it private.

The company was forced to release a statement yesterday afternoon after a surge in its share price.

Mr Lomax has been a significant investor in Misys since it was founded in 1979. He was chairman until the end of last year but bowed to pressure to split the roles. Last month, Mr Lomax said he would quit the board of Marks & Spencer after a spat with its chairman.

Misys consists of three distinct business divisions, and its conglomerate structure has led some analysts to argue it should be broken up and sold off to realise more value for investors. Its core business is providing software to bank customers around the world. It also operates a US healthcare software division that has performed well in recent years.

Finally, the company runs a network for independent financial advisers. In 2002, Misys said it would sell or demerge the IFA unit, Sesame, as it was non-core. But it pulled the sale this year, arguing it could not get the price it wanted.

Shares in Misys closed 21 per cent higher at 221.5p yesterday, the largest gain in four years. At that price, it has a market capitalisation of £1.2bn.

However, Misys stressed an offer had not yet been made and may not emerge. It has formed a committee to consider a request to "explore the possibility of making an offer" and added no price has been discussed. Traders said the bid price was rumoured to be 245p a share. A spokeswoman for Misys declined to comment on further details.

Given its conglomerate nature, Misys has long been considered a takeover target for private equity, with its banking and healthcare divisions attractive to other technology companies. George O'Connor, at Shore Capital, said until the share spike Misys traded on a significant discount to the software sector average. "It was as cheap as chips," he said.

Arden Partners reiterated its "buy" rating on Misys shares on Thursday, arguing revenue growth in the banking and healthcare divisions was not reflected in the company's valuation. Arden values it at 260p a share, although on a sum-of-the-parts valuation, the stock would be worth 270p.

However, Mr O'Connor has yet to be convinced that a deal will happen, arguing the statement confirms only "talks about talks". He said management could be "shaking the tree and banging the drum" to kick-start a rerating of its shares.

Computacenter, which sells hardware and offers IT services, announced management buyout talks late last year only to backtrack and retain its listing once the shares had spiked.

Yet with iSoft's woes wiping hundreds of millions of pounds off its valuation, a delisting of Misys shares would leave few options for technology investors in the UK outside the small caps. Sage Group, the FTSE 100's only technology constituent, ARM Holdings and LogicaCMG would be the only sizeable survivors of the dot.com boom.