UK competition regulator invites comments on ION-Fidessa deal

Maria Nikolova

The deadline for comments is July 2, 2018, whereas the expected decision date is August 13, 2018.

A couple of months after Fidessa Group plc (LON:FDSA), a provider of trading, investment and information solutions to the financial services sector, decided to recommend the offer made by ION Bidco, an indirect wholly owned subsidiary of ION Investment Group Limited, the deal reaches the UK Competition and Markets Authority (CMA).

Today, the regulator said it is considering whether it is or may be the case that the proposed acquisition if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002. If so, the CMA will check whether the creation of that situation may be expected to result in a substantial lessening of competition within any UK market for goods or services.

The CMA invites comments on the transaction from any interested party. These comments should be provided not later than July 2, 2018 to case officer Nick Wright. The expected decision date is August 13, 2018.

Let’s recall that, under the terms of the offer, Fidessa Shareholders will be entitled to receive £38.703 in cash for each Fidessa Share. This values the entire issued and to be issued share capital of Fidessa at approximately £1.5 billion on the basis of a fully diluted share capital of 39,133,650 Fidessa Shares.

In addition, qualifying Fidessa shareholders will be entitled to receive and retain a final dividend and a special dividend in respect of the year ended December 31, 2017 together amounting to 79.7 pence in aggregate per Fidessa Share. In aggregate, Qualifying Fidessa Shareholders will receive £39.50 for each Fidessa Share, comprising the cash consideration and the Dividend.

The price of £38.703 in cash for each Fidessa Share represents a premium of approximately 8.5% to the current offer price of £35.67 per Fidessa Share from Temenos which was announced on February 21, 2018. The price of £38.703 also represents a premium of 48.6% to the Closing Price of £26.05 per Fidessa Share on February 16, 2018.

The Offer implies an enterprise value multiple of approximately 4.7x Fidessa’s recurring revenue and 25.9x Cash EBITDA for the year to end-December 2017.

Regarding the rationale for the deal, ION Bidco has stated that it believes Fidessa represents an attractive opportunity to invest in a well-established business with a strong position in equities and derivatives trading solutions. ION Bidco believes that a combination with Fidessa will uniquely position the companies to drive innovation in trading technology and automation across all asset classes.

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