The Swiss tech firm has agreed to buy a UK business, arguing that large changes to the world's capital market structure create an opportunity.

Temenos, the Switzerland-headquartered software supplier that works in areas including private banking, is in talks to buy UK-based Fidessa Group for about £1.4 billion ($1.96 billion).

Under terms of an offer, Fidessa shareholders would receive £35.67 in cash for each share, plus dividends of 0.797 pounds per share, Temenos said in a statement yesterday. It added that the price of £35.67 represents a premium of approximately 36.9 per cent to the closing price of £26.05 per Fidessa share on 16 February 2018.

Fidessa shares jumped by as much as 24.7 per cent on Tuesday to £36.35, trading below the offer price (source: Reuters).

“Further to the announcement by Temenos and Fidessa on 20 February 2018, the boards of Temenos and Fidessa have today reached an agreement on the terms of a recommended all cash acquisition by Temenos, through its wholly-owned subsidiary, Temenos Holdings UK Limited of the entire issued and to be issued ordinary share capital of Fidessa,” Temenos said in its statement.

Fidessa, which listed on the London Stock Exchange in 1997, provides software and services for investment management systems, analytics and market data, serving both the buy-side and sell-side. Its products include an order management system for equity markets.

If the deal goes ahead, the enlarged group would have, on a pro-forma basis, more than $1.2 billion of revenues for the year ended 2017 an earnings before interest, taxation, depreciation and amortisation margin of 32.3 per cent. The acquisition would create a group that earned about 42 per cent of sales in Europe, 29 per cent in the Americas, 20 per cent in Asia-Pacific, and nine per cent in the Middle East and Africa regions, the firm said.

“The Temenos board expects the Transaction to generate approximately $60 million per annum of run-rate pre-tax cost synergies, which are expected to be fully achieved within three years post completion,” Temenos added.

The capital markets industry is undergoing structural changes that will require it to renew its software systems. However, the current vendor landscape is fragmented and dominated by legacy technology. This creates a huge opportunity to combine the complementary product strengths of Fidessa and Temenos in the front and back office to create a highly differentiated multi-asset class end-to-end platform for capital markets that will offer best in class costs and processing capabilities," Andreas Andreades, executive chairman of Temenos, said.