(Reuters) - British financial trading systems firm Fidessa has ditched a takeover by Swiss banking software business Temenos in favor of a 1.5 billion-pound ($2.1 billion) deal with rival bidder Ion.
The London-listed company on Friday agreed to a cash offer from Ion of 38.703 pounds-a-share, a bid that is 8.5 percent higher than the 35.67 pound-a-share deal that Fidessa had struck with Temenos on Feb. 21.
Including 79.7 pence of dividends due to be paid in June, it means Fidessa shareholders are set to receive 39.50 pounds-a-share in total.
Fidessa investors representing about 25.1 percent of the company’s shares have already agreed to support the takeover, Ion said in a statement.
The funds backing the deal include Elliott, the U.S. activist hedge fund that disclosed a stake in Fidessa in the wake of the Temenos agreement and which has a track-record of intervening in takeover situations to secure higher offers.
The other supporters are Lindsell Train and Evenlode Investment Management.
John Hamer, Fidessa’s chairman, said a deal with Ion, a financial software group backed by U.S. private equity firm Carlyle, “has a compelling strategic rationale”.
Andrea Pignataro, Ion’s chief executive, added: “Fidessa’s leading position in equities and derivatives trading solutions complement our fixed income and FX capabilities and will enable us to serve our customers more effectively across all asset classes and accelerate innovation.”
Temenos said it would not be making a revised offer for Fidessa.
The Ion agreement comes after weeks of uncertainty about the Temenos deal.
Fidessa disclosed on April 5 that it had received approaches from two new potential suitors, Ion and U.S. firm SS&C Technologies (SSNC.O). The Ion deal was announced less than three hours before a deadline for the counterbidders to either make a firm offer or walk away from Fidessa expired at 5 p.m. (1600 GMT) on Friday.
If SS&C wants to make further counterbid, it must offer at least 41.50 pounds-a-share, including the dividend payments, for Elliott, Lindsell Train and Evenlode to be released from their pledge to back the Ion offer, according to a source with direct knowledge of the terms of the undertakings made by the three investors.
A new deadline for competing offers will be set, the source said. SS&C did not immediately respond to requests for comment.
Fidessa shares rose 1.4 percent to close at 40.55 pounds on Friday afternoon.
The Ion takeover comes amid a wave of deal activity in Britain, as companies take advantage of cheap debt to pursue mergers and acquisitions (M&A).
The value of M&A involving British firms jumped by 56.5 percent to $164.3 billion during the first quarter, the highest level since 2007, according to Thomson Reuters data.
Reporting by Ben Martin in London and Rahul B in Bengaluru; Additional reporting by Radhika Rukmangadhan in Bengaluru; Editing by Gopakumar Warrier, Gareth Jones and Mark Potter