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Buying its next-largest competitor in core processing would make Fidelity National Information Services Inc. a giant in banking technology and position it against the even larger companies it expects to enter the market.
April 2 -
Fidelity National Information Services Inc. of Jacksonville, Fla., said Wednesday that it had agreed to acquire Metavante Technologies Inc., making it the industry's largest banking technology vendor by far.
April 1
Fidelity National Information Services Inc. expects to complete its purchase of Metavante Technologies Inc. by Oct. 1 now that the vendors have cleared the final hurdles to their $2.94 billion deal.
Fidelity, of Jacksonville, Fla., announced last week that the Department of Justice had given the companies clearance to complete the deal.
Fidelity and Metavante shareholders voted Friday to approve the deal, which would give Metavante stockholders 1.35 Fidelity shares for each share they hold in Metavante.
In addition, Fidelity plans to issue 16 million shares to affiliates of the Boston private-equity firm Thomas H. Lee Partners LP, a longtime investor, and its former corporate parent, Fidelity National Financial Inc.
Though executives of the two companies have said the deal was never was in doubt, market players seemed uncertain. As recently as last Wednesday the brokerage Pali Capital Inc. calculated the market was pricing in a 15% chance that the deal would hit a Justice Department roadblock.
"We believe that this is excessive and we would consider setting up the deal spread at the current prices," Pali analyst Krisztian Szentessy said in a report analyzing the antitrust issues facing the core processing business. The deal spread is an arbitrage play to profit off the price differential of the two companies.
Fidelity and Metavante, of Milwaukee, announced their agreement in April. Though their combined $5.2 billion of 2008 revenue would make the merged company larger than Fiserv Inc. of Brookfield, Wis., the current leader in the core-systems business, Fidelity and Metavante executives said at the time they were more concerned about the entry into that market by general-purpose data processing giants such as Oracle Corp. and International Business Machines Corp.
The brokerage firm Robert W. Baird & Co. downgraded Metavante's stock on Friday to "neutral," from "outperform," after the Justice Department decision.
David Koning, the Baird analyst who follows banking vendors, said the valuation of Metavante' stock price "has finally caught up with Fidelity's."
The Oct. 1 target date for the closing is also a convenience, Koning said. "If we have an exact quarter, it makes everything easier to think about, rather than having a couple of partial quarters."
