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GTCR announces proposal to acquire Fundtech

Private equity firm GTCR has submitted a proposal to acquire Fundtech, a leading provider of transaction banking software and services to financial institutions, for USD23.33 in cash for each Fundtech ordinary share.

 

GTCR intends to combine Fundtech and BankServ, a GTCR portfolio company, creating a global leader in the growing market for payments and banking technology delivered to financial institutions and corporations.

Fundtech’s Board of Directors has determined that the GTCR Proposal constitutes a “Company Superior Offer” under Fundtech’s previously announced merger agreement with S1 Corporation (S1). Fundtech has delivered the required notice to S1 of its intent to change its recommendation in favour of the merger with S1 and to terminate the S1 merger agreement and enter into a written definitive agreement relating to the GTCR Proposal, subject to the terms of the S1 merger agreement, including S1’s right to propose within five business days changes to the S1 merger agreement if applicable. The GTCR Proposal contemplates that Fundtech’s largest shareholder, Clal Industries and Investments Ltd., which currently owns approximately 58% of the ordinary outstanding shares of Fundtech, would vote in favor of the transaction. Subject to receipt of Fundtech shareholder approval and satisfaction of other conditions, the transaction would be expected to close in the fourth quarter of 2011.

Fundtech is a leading global provider of software solutions and services that facilitate payments processing, financial messaging and cash management for more than 1,000 financial institutions in more than 70 countries. BankServ is a leading US SaaS (software-as-a-service) provider of financial services and banking technology that offers wire transfer, SWIFT messaging, remote deposit capture, mobile and online payment processing technology to over 500 financial institutions and corporations. The combined company would be a global industry leader in payments and banking technology with a comprehensive suite of solutions serving the needs of financial institutions and corporations around the world.

The combined company, Fundtech, Inc, would have its headquarters at Fundtech’s US headquarters in Jersey City, New Jersey. Reuven Ben Menachem, founder and Chief Executive Officer of Fundtech Ltd, would serve as Chief Executive Officer of Fundtech Inc. David Kvederis, founder and Chief Executive Officer of BankServ, would support the integration of BankServ and Fundtech as a member of Fundtech Inc.’s Board of Directors. Management from both predecessor companies would participate in the future growth and success of the combined business.

“Fundtech is a premier financial technology franchise, and combining these two complementary companies would create an industry leader in the growing market for innovative banking technologies and electronic corporate payments,” says Collin Roche (pictured), GTCR principal. “Together, these businesses would participate in all segments of the global market with best-of-breed technologies and a broad product offering. Existing customers can expect the continuation of excellent technology and service quality that is a benchmark of each of these companies.”

“GTCR’s extensive experience investing in payment processing and banking-related businesses makes them a strong partner to support the continued growth of Fundtech,” said Reuven Ben Menachem, CEO of Fundtech. “We remain committed to delivering best-in-class technology and innovative solutions to serve the needs of our customers around the world, and a partnership with GTCR would allow us to accomplish that goal.”

“We are excited to have the opportunity to partner with Reuven Ben Menachem and the combined management teams to continue building a leading financial technology company,” says Aaron Cohen, GTCR vice president. “We expect the combined company to continue its investment in technology and service offerings for global growth, supplemented by selective acquisitions.”

Skadden, Arps, Slate, Meagher & Flom LLP and Herzog, Fox & Neeman served as legal counsel to GTCR. Moelis & Company, RBC Capital Markets and BMO Capital Markets served as financial advisors to GTCR. Royal Bank of Canada, BMO Capital Markets and Newstone Capital Partners provided debt financing in connection with the proposed transaction. GTCR’s proposed investment in Fundtech will be made from GTCR Fund X, a private equity fund raised in 2011 with USD3.25 billion of committed capital.

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