Misys softens as SunGard exits bidding war

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The Independent Online

Misys shares sank 8 per cent yesterday as SunGard Data Systems pulled out of the bidding war for the software developer and a bid from its management was dismissed as too low.

The protracted bidding process has been going on since June when Misys first revealed it had been approached regarding a management buyout. Fears that only one bidder remained after SunGard's withdrawal spooked investors, leaving the shares trading at 231.25p. Misys tried to assure the market that talks with "various" parties were continuing.

SunGard, a large US software company that was taken private in a $11.4bn (£6.1bn) deal last year, was considered one of the more likely bidders and has been conducting due diligence since July. However, SunGard was thought to be interested only in the core financial services software division of Misys, meaning it would have had to find a buyer for the UK company's US healthcare division and its IFA network, Sesame.

Misys has appointed an independent committee, headed by the non-executive chairman Sir Dominic Cadbury, to review bids after opening its books in July. In an unscheduled statement yesterday, the committee said it had yet to receive any proposals "which it considers should be put to shareholders".

Sources said a bid tabled by the company's management, led by founder and chief executive Kevin Lomax, had been dismissed as too low. The source declined to comment on what level the offer had been pitched at. Initial expectations in June were for a bid worth 245p a share that would value the company at about £1.2bn. However, shares have traded above the 250p level in anticipation of a bidding war.

Misys declined to comment on SunGard's position in the bidding process but stressed that talks with various parties are continuing. Other parties still involved in the process include Fiserv, a US software company, and the venture capitalists Permira and General Atlantic, which are thought to be backing the management. A third proposal has been tabled by three former directors of the company that plan to break up the company while it is still listed. This plan would see Misys focus on its core banking software division and creating value through the disposal of non-core assets.

Analysts have often said the company would be worth more if it were broken up and sold to industry rivals, as its shares are valued at a discount due to the company's conglomerate structure. There is little synergy across Misys's two main businesses.

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