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Table of Contents

Lead Story

IRS says no merchant fees for 1099-K reporting: Who's listening?

News

Industry Update

PCI SSC seeks focus group topic

Visa outlines post-Durbin strategy

Is biggest Durbin impact loss of routing control?

FiServe CEO says Durbin good for tech spending

ACI thwarting S1-Fundtech merger

Trade Association News

Features

An interview with Kurt Strawhecker

Ken Musante
Eureka Payments LLC

Banks counseled to meet the underserved

Patti Murphy
ProScribes Inc.

Research Rundown

Mobile payments present new sales channel

Gene Distler
VeriFone Inc.

Antiquated thinking could doom mobile payments at the POS

Biff Matthews
CardWare International

The green advantage

Selling Prepaid

Prepaid in brief

Streit says Green Dot exempt from Durbin

Winning prepaid's PR battle with regulation

Views

Checks: Like the Energizer Bunny, they just keep going

Patti Murphy
ProScribes Inc.

Education

Street SmartsSM:
Why MLSs should attend tradeshows

Bill Pirtle
MPCT Publishing Co.

SAFE Data notification bill: Does it go far enough?

Nicholas Cucci
Network Merchants Inc.

Working your P-L-A-N

Dale S. Laszig
Castles Technology Co. Ltd.

Company Profile

Blueprint SMS

New Products

Cloud-based document printing hits college campuses

Heartland Campus Solutions WEPA program
Heartland Payment Systems Inc.

Stop identity theft and fraud in its tracks

IdentiFlo Management Platform
Electronic Verification Systems LLC

Inspiration

The art of venting

Miscellaneous

Can new regulatory burdens become a competitive advantage?

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

August 22, 2011  •  Issue 11:08:02

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ACI thwarting S1-Fundtech merger

Payment software company S1 Corp. appears to be caught between a friendly merger and a forceful acquisition. S1's board of directors is attempting to move forward with a $700 million all-stock merger with payment software company Fundtech Ltd. while fighting off a $540 million cash offer by payment software competitor ACI Worldwide Inc. to acquire S1.

The story began in June 2011 when S1 revealed its plan to merge with Fundtech. The tax free deal called for S1 shareholders to own 55 percent of the new company to be called Fundtech after a stock swap. The two companies, neither of which have any debt, estimate they will save $12 million annually beginning in 2012 if the merger is actualized. "The companies have complementary product offerings and extensive cross-selling opportunities which will position the combined company to secure larger contracts and cultivate more strategic relationships with customers," stated Fundtech Chief Executive Officer Reuven Ben Menachem in an announcement about the proposed merger.

"The future of the transaction banking industry is highly dependent upon innovation and state-of-the-art solutions and this combination will put us at the forefront of these advancements," S1 President and Chief Executive Officer Johann Dreyer added. "This merger will expand our geographic footprint and enhance our ability to accelerate revenue growth and increase profitability."

ACI advances aside, to proceed, the merger must be approved by both companies' shareholders, regulatory agencies and Israeli courts. Fundtech noted in a recent release that "there can be no assurances that the closing conditions will be satisfied."

ACI suitor

In July 2011, ACI Worldwide extended a $540 million cash offer to S1 amounting to $9.50 per share. This per-share cash offer was a 23 percent premium over the 52-week S1 stock high of $7.75 per share. The deal would allow S1 stockholders to take up to 40 percent of the buyout in ACI stock, tax free.

The acquisition would leave S1 shareholders owning up to 15 percent of ACI. "With S1, we believe that ACI would further enhance its current position as a global leader in the enterprise payments software industry as a larger, more diversified company that is strongly positioned in a wide range of markets and supported by a broader base of revenues and earnings," said ACI President and CEO Phillip Heasley at the time of the offer.

S1, Fundtech respond

S1 immediately responded to the ACI proposal, saying in a press release, "S1 continues to be bound by the terms of the merger agreement with Fundtech." S1, however, agreed to study the ACI offer "in a manner consistent with its obligations under the merger agreement with Fundtech."

Fundtech issued a statement, saying, "The merger agreement with S1 remains in effect."

S1 formally rejected the ACI offer in early August 2011. "The board unanimously concluded that pursuing discussions with ACI at this time is not in the best financial or strategic interest of S1 and its stockholders." S1's commitment to the Fundtech merger was reaffirmed in the press release announcing the decision.

"The S1 Board gave careful consideration to each of the proposed terms and conditions of ACI's proposal," stated John W. Spiegel, Chairman of the board of directors for S1, when he announced the board's decision to reject ACI. "We believe that continuing to execute on our long-term business plan, which includes the business combination with Fundtech, will best help us maximize stockholder value and achieve our strategic goals."

ACI continues to pursue its offer to buy S1, however. Following the S1 rejection of its offer, ACI said in a press release that S1's rejection does not change ACI's "strong belief that ACI's $9.50 per share cash and stock proposal is superior to the Fundtech transaction." ACI also stated it is "prepared to do what is necessary to make this happen."

For additional news stories, please visit www.greensheet.com and click on "Read the Entire Story" in the center column below the latest news story excerpt. This will take you to the full text of that story, followed by all other news stories posted online.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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