Apax-led consortium drops out of auction for Italy's Cedacri: sources

LONDON/MILAN (Reuters) - A consortium of buyout fund Apax and digital services firm Reply has dropped out of the auction process for Italian banking software firm Cedacri, two sources told Reuters, leaving three bidders vying for control of the 44-year old business.

IT consultancy Accenture and Italian IT services provider Engineering, backed by Bain Capital, submitted rival bids for Cedacri ahead of a mid-November deadline and have progressed to the second stage of the auction, the sources said, speaking on condition of anonymity as the matter is private.

Dublin-based software and financial-data provider ION, led by Italian businessman Andrea Pignataro, is the third bidder left in the process, the sources said.

The company, which provides anything from banking solutions, cloud services, big data and advanced analytics to over 70 banks, has been valued at more than 1 billion euros ($1.19 billion), representing a multiple in excess of 10 times its core earnings of about 100 million euros, the sources said.

Cedacri and the bidders declined to comment.

Discussions with Accenture, Engineering and ION are expected to gain momentum in the coming weeks, the sources said, as when bidders will be able to perform due diligence on the business, based in the northern Italian town of Parma.

Private equity fund Apax had teamed up with Reply to provide industry expertise but its bid failed to progress, the sources said.

Cedacri, which is advised by Deutsche Bank, aims to wrap up the process before the end of the year but a deadline for final offers has yet to be set and the negotiations may slip into January, the sources said.

The company, led by boss Corrado Sciolla, is backed by Italian state-backed fund FSI, with a 27% stake, and by another 14 financial institutions including Unipol and Banca Mediolanum.

Its investors hope to take advantage of whopping valuations for fintech assets and could receive binding offers valuing the company at between 1 and 1.5 billion euros, the sources said.

Reporting by Pamela Barbaglia and Elisa Anzolin; Edited by Kirsten Donovan and David Gregorio