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ACI Worldwide Inc. on Thursday sweetened its offer for rival payments-software vendor S1 Corp. Facing stiff resistance from S1’s management, ACI added 50 cents a share to the cash portion of its bid, increasing it from the $5.70 it first offered July 26 to $6.20. It is also offering about one-tenth of a share of ACI stock for each S1 share.
The total value of ACI’s offer, based on ACI’s closing share price on July 25, the day before its original offer, is now $10 per S1 share. That compares with ACI’s original bid of $9.50 per share. ACI’s stock, traded on the New York Stock Exchange, has dipped about $10 a share from the $28.30 it fetched July 25. S1’s stock, which trades on the Nasdaq, closed Aug. 24 at $8.88, up nearly 25% from its July 25 close. The stock was trading around $9 at mid-day Thursday.
ACI’s enhanced bid is the latest move in what has turned out to be a determined struggle between the Elkhorn, Neb.-based company and S1’s top managers and board for the loyalty of S1’s shareholders. Earlier this week, Atlanta-based S1 made public a letter to its shareholders urging them to vote in favor of a merger with Jersey City, N.J.-based banking-software firm Fundtech Ltd. The Fundtech deal involves an all-stock offer for Fundtech shares valued at $700 million.
A shareholder vote on that proposed combination, which S1 and Fundtech announced in June, is set for Sept. 22. S1, whose board early this month formally rejected the original ACI offer, also advised shareholders to disregard a proxy sent to them by ACI, which is urging the shareholders to vote against the merger and clear the way for ACI’s bid.
In its letter, S1 officials told shareholders ACI’s bid is based on fear of the competitive potency of a possible S1-Fundtech combination. The letter alleged S1 on its own has been successful in poaching ACI clients and has enjoyed revenue growth at ACI’s expense. In making its increased bid on Thursday, ACI fired back: “ACI’s customer attrition rates for each of the past four years have been in the low single digits as a percent of its 60-month backlog and any attrition has primarily been the result of merger activity among customers rather than competitive losses,” the company said in a letter to S1 shareholders announcing its new offer. “Contrary to S1’s assertions, we believe that S1 has not achieved its stated revenue gains [at] ACI’s expense.”
ACI also repeated assertions it has made previously against the proposed merger with Fundtech, alleging it is not in the best interests of S1’s shareholders. It underscored its claims that its own bid offers a “premium value” to shareholders.
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“S1's Board of Directors will review the terms of the revised proposal submitted by ACI in a manner consistent with its obligations under the merger agreement with Fundtech and applicable Delaware law, and will consider such options or alternatives that it believes to be in the best interests of S1’s stockholders,” S1 said in a statement released late on Thursday.
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