Contact: Ben Kolada
Though previously engaged in a joint venture (JV) named Monitise Americas, mobile banking startup Monitise and Fidelity National Information Services (FIS) have been growing apart. Through a series of moves, the two companies, though still partners, seem to be getting ever closer to completely severing their relationship.
The eventual breakup appears to be spearheaded by Monitise. For just over three years, Monitise and FIS owned a JV named Monitise Americas. However, in November 2011, Monitise brought the JV completely under its own control, perhaps as a prelude to its next major M&A play.
Following the severing of that venture, FIS threw its weight behind Monitise competitor mFoundry, participating alongside MasterCard and existing investors in an $18m round of financing for mFoundry that was disclosed in December 2011. Not only was FIS’s involvement here a competitive slap in the face, but the inclusion of MasterCard in the round put another nail in the coffin, as MasterCard rival Visa and its affiliates have been longtime investors in Monitise.
In response, just three months later, Monitise announced its $173m all-stock acquisition of North American counterpart Clairmail. Clairmail was a direct competitor to mFoundry, similar in both headcount and product portfolio.
With tension mounting, FIS recently announced that it is acquiring the remainder of mFoundry that it doesn’t already own for $120m in cash. If the relationship between FIS and Monitise continues, it certainly won’t be as amicable as before. Although Monitise still called FIS a partner in its most recent annual report (released in September 2012), the feeling may no longer be mutual.
Breaking up the M&A way
||Monitise buys out the remainder of Monitise Americas that it didn’t already own from FIS.
||FIS invests alongside MasterCard in Monitise competitor mFoundry.
||Monitise acquires mFoundry rival Clairmail for $173m.
||FIS acquires the remainder of Monitise/Clairmail competitor mFoundry that it didn’t already own for $120m.
Source: The 451 M&A KnowledgeBase, 451 Research
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-Contact Thomas Rasmussen
With reports indicating that IBM has pulled its multibillion-dollar offer for Sun Microsystems, the second-largest deal of the year so far is the $2.9bn all-equity purchase of Metavante by Fidelity National Information Services (FIS) announced in early April. (Yesterday, Express Scripts announced that it will fork over $4.7bn for WellPoint’s NextRx subsidiaries.) In fact, we recently noted that the first quarter closed without a single transaction worth more than $1bn. It was the first time a quarter passed without a 10-digit deal since we began keeping records in January 2002. This transaction consolidates two active acquirers. Metavante and FIS have together inked more than 30 purchases over the past five years: FIS has completed 18 deals worth north of $7bn (excluding this pickup), while Metavante has closed 15 to the tune of about $1.4bn.
The combined FIS and Metavante will have revenue of $5.1bn, about $300m in cash after the transaction closes, and free cash flow of about $700m. However, though the management of the new company outlined its healthy cash flow as means for making further acquisitions, we don’t expect them to step immediately back into the market as the giants work on integrating the blockbuster deal. (We would note that both FIS and Metavante were out of the market in 2008.) Instead, we expect near-term consolidation to likely come from the firm’s two remaining large competitors Fiserv and First Data Corp, which Kohlberg Kravis Roberts took private for $30bn two years ago. Additionally, we could see Oracle and IBM using their vast cash reserves to buy their way into this sector. In fact, FIS and Metavante said in their conference call discussing their planned transaction that one of the reasons they were getting together was to stave off the expected competition from Oracle and Big Blue. So who might be of interest to any of these buyers? We suspect smaller players such as Jack Henry & Associates or even payments competitors TeleCommunication Systems and S1 Corp could well become targets.
Financial IT M&A by the now three largest buyers since 2002
||Number of deals
||Total deal value
|First Data Corp
Source: The 451 M&A KnowledgeBase