SS&C Flirts with Further Acquisitions after Fidessa

SS&C CEO Bill Stone said that the company is flush with cash after the failed Fidessa bid and will look to use it to continue its acquisition spree.

acquisition

Fund administration and buy-side technology giant SS&C Technologies will seek to make further acquisitions in the "$1 billion to $3 billion" range and is interested in a number of properties, following its aborted attempt to acquire rival vendor Fidessa, its chief executive has said, adding that the company has hundreds of millions of dollars to finance further deals.

In early April it was announced that SS&C Technologies and Ion Investment Group had made separate offers to counter Temenos’ bid for Fidessa Group. While the battle for Fidessa is still unfolding, it won’t be SS&C winning the darling of London’s fintech scene—at least not at this point, anyway, after its April 24 announcement that it would not be making a bid. That also doesn’t mean that SS&C is content to sit on its hands.

On a call with investors to announce the company’s first-quarter earnings on May 1, SS&C chief executive Bill Stone praised Fidessa, but said that the asking price—which is currently being reported at $2.1 billion (£1.5 billion) in a cash offer—was too steep.

“We were disciplined about Fidessa—we think that’s a good platform, we think that’s a good product, we think that’s a good company—but the price was nose-bleed level and that’s not generally what SS&C does,” Stone said. “We like Fidessa and we met with them several times, but in the end we’re disciplined and we’re not going to be railroaded, we’re not going to believe that you don’t have to pay the debt back. …While we think that Fidessa is a very good asset—and I continue to believe that—it’s not exactly in our wheelhouse—pretty close, but not exactly.”

Looking for the silver lining, Stone added that because the Fidessa deal fell through, SS&C now has “a little extra cash” on hand to make another deal—or deals—in the near future. The company completed a $1.4 billion cash raise through an offering of common stock, which concluded on April 6, designed to finance its February deal for DST Systems.

“We raised a little extra cash and we have about $750 to $800 million in cash on our balance sheet. There are a number of properties that are in the marketplace, or coming to the marketplace, that we have some reasonable interest in, and those would range from probably a cost of $1 billion to $3 billion,” Stone said. “I think with the cash on hand and we obviously still have some dry powder in our debt facilities, we’d be able to accomplish those without much strain on us.”

Should the M&A market dry up, Stone said that they will use the cash to deleverage and buy back shares, but the focus for the deal-hungry SS&C, which has purchased over 50 companies since 1995 (see chart), is further growth through acquisition.

“We hopefully will find some more acquisitions and move more quickly because the financing will be easier because of the cash we have on the balance sheet,” he said. “We’ve been at this for a long time and navigated through—I think DST was our 50th acquisition—and I’m not saying we have a perfect track record, but we have a good track record.”

Fidessa declined to comment “due to regulatory reasons.”

DST Closes

On April 16, SS&C announced that it had completed its acquisition of DST Systems. While Stone said that the two entities are “moving as quickly as possible” to integrate their systems and cut out redundancies, he was short on specifics as to specifics.

Stone said that he has met with about 20 to 25 of DST’s biggest clients to answer questions and ease concerns.

“Let’s say someone has a middle office with 140 people in it, now maybe we can show them how they can have a middle office with 40 people in it,” he said. “Those kinds of productivity gains are pretty attractive in businesses that are, while still great businesses, are not quite as lucrative as they were before.”

He said that they will love to improve DST’s user interface, add more mobile functionalities, and make it easier to get more access to data. They will also look to bring DST’s sales objects in line with SS&C’s aggressive timelines.

“The biggest [change for DST] is that we’re a pretty sales-oriented organization and maybe more so that DST was. [DST’s] salesforce kind of expects a 100-day process between when they get a win and when the paper gets signed. We’d like that to be about 30 days,” Stone said. “That’s a big change to go from 100 days to 30 days. And we’d like for 30 to go to 15. I think that’s maybe the biggest change.”

 

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