Misys opens books to private equity

Permira and General Atlantic Partners and a consortium led by Silver Lake Partners have been given the go ahead to carry out due diligence on Misys, a banking and healthcare software group.

Permira, Europe’s largest LBO firm, and General Atlantic Partners, a US private equity house, are in the running to acquire Misys, after the banking and healthcare software business said that it would open its books to allow several interested parties to conduct due diligence.
 
According to the Financial Times, Permira and General Atlantic Partners have submitted a joint bid for Misys, as has a consortium including Silver Lake Partners, a US technology buyout firm, and Sungard Data Systems, a US financial services software group. 
 

Lomax: management buyout approach triggered private equity interest

The move was initially sparked by a management buyout approach in mid-June from Kevin Lomax, chief executive of Misys and a founding investor in the business.
 
A statement yesterday from Misys said: “The independent committee has received a number of indicative offers for the whole of the company as well as for parts of the company, from a number of parties. The independent committee, led by Sir Dominic Cadbury, has evaluated these offers with its advisers and has concluded that it is in the best interests of shareholders to allow certain parties access to specific non-public information in order to carry out due diligence.”
 
Neil Darke, head of Quest, Collins Stewart’s proprietary valuation tool, said that the chances of Misys remaining a public company in its current form are “almost non-existent”. It could remain public if it broke itself up. He said: “Misys has, for some time, been thought of as a break-up or private equity candidate, but people have been nervous about doing anything before knowing Kevin Lomax’s position. His outlining of a management buyout proposal has given some comfort on that front.”
 
Darke said that an offer of around 240 pence per share would represent good value for a purchaser as “you could easily construct an argument for a much higher valuation, up to nearer 300 pence, as there are a lot of potential moving parts within the business.”
 
Misys’ shares were trading at 243 pence per share at 1400 BST today, slightly down from 246 pence at 9am BST. An offer of 243 pence would value the business at approximately £1.21 billion (€ 1.77 billion).
 
Silver Lake Partners’ association with SunGard Data Systems goes back to March 2005. The firm invested alongside Kohlberg Kravis Roberts, The Blackstone Group, Bain Capital, Goldman Sachs Capital Partners, Providence Equity Partners and Texas Pacific Group in the $11.3 billion buyout of SunGard Data Systems, at the time the largest private equity deal since the $31.3 billion RJR Nabisco buyout of 1989