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Fundtech's withdrawal and the lack of a white knight force payments software company S1 to merge with a rival.
October 3
The Justice Department has again delayed its decision on the ACI Worldwide Inc. acquisition of S1 Corp., prompting ACI to extend the closing of the acquisition until Feb. 10.
While the extension from the earlier Jan. 31 closing date is merely an administrative formality, the anti-trust issues are not, experts say.
ACI has already made multiple extensions to the closing of this acquisition, which it initially planned to complete by the end of last year.
"This could take more than 10 days and it would not surprise me if it needed another extension," says Larry Berlin, a vice president and research analyst for First Analysis Securities Corp.
The deal will likely close some time in the first quarter, Berlin says.
ACI would not comment on the delay, but a combined ACI and S1 would have significant heft in payment processing, Berlin says.
The anti-trust issues were more significant this summer, when S1, of Norcross, Ga., was the subject of what was initially a hostile takeover bid by ACI.
ACI derailed a proposed merger between S1 and Fundtech Ltd. (now called Fundtech Inc.) in late June. Fundtech cut bait and agreed to be bought by GTCR LLC, a Chicago private equity firm. The firm merged Fundtech with software provider Bankserv in a deal valued at nearly $400 million.
ACI and S1 both have products that let large merchants route and consolidate credit and debit card payments internally before moving them on to merchant acquirers, Berlin says.
ACI is also seeking to compete as a payment hub provider, in effect becoming payment processing and payment services supermarket for financial services companies. In addition to payment processing, payment hubs such as the new Fundtech let banks and their business customers move money domestically and internationally through Swift and ACH transactions. They also provide cash and corporate treasury management services and online and mobile banking products and services.
In October,
Under terms of the agreement, S1 stockholders would get $10.00 in cash or 0.3148 shares of ACI stock for every S1 share they own, subject to proration. In total, 33.8% of S1 shares would be exchanged for ACI shares, and about 66% would be exchanged for cash. The deal is subject to various conditions, including the termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
If the deadline arrives and the Justice Department has not commented, ACI can proceed with the deal, Gil Luria, senior vice president of equity research for Wedbush Securities, wrote in an email.
ACI must, however, give the department ten days' notice of its intentions.
"But the DOJ could also challenge the deal and ACI may need to divest … the S1 payment software business," Luria wrote.
S1's card payments business generated approximately $12 million in revenue in 2010, ACI said in a press release.
