The sale of Fundtech Ltd. (Nasdaq: FNDT; TASE: FNDT) and a handsome exit by Clal Industries and Investments Ltd. (TASE: CII), a holding company of IDB Holding Corp. Ltd. (TASE:IDBH), controlled by chairman Nochi Dankner, is apparently only a matter of time. Yesterday, the "Globes" report that Clal Investments was in talks to sell its 58.6% stake sent Fundtech's share price up 16.6% on Nasdaq on a trading volume 15 times its average, to $20.28, giving a market cap of $306 million.
Today, Clal Industries and Fundtech published a response, confirming that the company was in initial talks on possible deals. Fundtech also says that it regularly conducts discussions with parties on potential deals, including potential acquisitions and other business combination transactions. Fundtech reported that one of the deals under consideration was a merger with a US company.
Fundtech added that it was also recently approached by a multinational corporation to express its interest in entering into a deal to acquire the company. Fundtech said that no agreement has been reached on a deal and there could be no assurances that any deal would result from the current preliminary discussions.
"At any company, if there is a good business and good performance, the buyers come," Oppenheimer analyst Sergey Vastchenok told "Globes". "What usually causes M&A deals to fall through is that the sellers don’t want to sell, which was the case with Fundtech in the past."
Vastchenok says that Fundtech is a quality company as far as its customer base and technology are concerned. He mentioned several names of possible suitors for Fundtech, including competitor ACI Worldwide Inc. (Nasdaq: ACIW), which has a market cap of $1 billion, and Britain's Logica plc (LSE; Euronext: LOG), which is engaged in Fundtech's field among other things and has a market cap of $3.4 billion.
Vastchenok also mentioned Fidelity National Finance Inc. (NYSE: FNF) and Fiserv Inc. (Nasdaq: FISV), which have market caps of $9.7 billion and $9 billion, respectively. Neither company operates in Fundtech's field, but they have similar customer bases. Bottomline Technologies Inc. (Nasdaq: EPAY), which operates in the cash management sector, could also fit the bill.
Oppenheimer gives Fundtech an "Outperform" recommendation with a target price of $25. Vastchenok doubts that a deal will be closed for less.
Fundtech's life as a public company began with its Nasdaq IPO in 1998, when it raised $30 million at $13 per share. The share price crossed the $20 threshold yesterday for the first time since late 2000. At its peak in 1999, the share was traded at over $40. It fell to a low of $3.30 in 2002, after the high-tech bubble burst.
Fundtech has grown over the years through acquisitions. Most of the acquisitions were for a few million dollars, and gave the company entry to new markets. For example, it acquired India's CashTech for $7 million in 2004 and it acquired Welsh company Accountis Ltd. for ₤5.8 million in 2008.
Fundtech's share price rose 3% in early trading on Nasdaq today to $20.88, giving a market cap of $327 million, after rising 16.4% on the TASE to NIS 69.47.
Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2011
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