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8-K - FORM 8-K - ACI WORLDWIDE, INC. | c65991e8vk.htm |
EX-99.2 - EX-99.2 - ACI WORLDWIDE, INC. | c65991exv99w2.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ACI WORLDWIDE INCREASES OFFER FOR S1 CORPORATION
Company
Filing Definitive Proxy Statement and Mailing Letter to S1 Shareholders
Urges S1 Shareholders to Vote the BLUE Proxy Card
NEW YORK, August 25, 2011 ACI Worldwide, Inc. (Nasdaq: ACIW), a leading international provider
of payment systems, today announced that it has increased its cash and stock proposal to acquire S1
Corporation (Nasdaq: SONE) from $5.70 per share, plus 0.1064 ACI shares, to $6.20 per share, plus
0.1064 ACI shares, assuming full proration. Based on ACIs closing stock price on July 25, 2011,
the last trading day prior to the public announcement of the ACI proposal, the ACI enhanced
proposal has a blended value of $10.00 per share, and based on the closing price of ACI on August
24, 2011, the ACI enhanced proposal has a blended value of $9.29 per share.
ACI is committed to taking the necessary actions to complete our proposed acquisition of S1, and
we believe todays action is the next step forward in this process, said Philip G. Heasley,
President and Chief Executive Officer of ACI. Given the uncertain and volatile market conditions,
we have enhanced the cash component of our proposal to provide
additional certainty and value for S1
shareholders.
ACIs proposal represents a 30% premium to S1s market price on July 25, 2011, the last trading day
prior to the public announcement of ACIs proposal, a 29% premium to the volume weighted average
price of S1 shares over the previous 90 days prior to the announcement and a 20% premium to the
52-week high of S1 shares, for the 52-week period ending July 25, 2011.
ACI anticipates that the proposed transaction could close as early as the fourth quarter. The
Company has secured committed financing from Wells Fargo Bank, N.A. for the cash portion of the
transaction and has offered to provide S1 with a copy of a commitment letter upon request. In
addition, to resolve any potential barriers to consummating a transaction, ACI has reiterated to S1
that it is willing to provide appropriate assurance of satisfaction of the Hart-Scott-Rodino Act
condition, including a divestiture commitment (if required) and substantial break-up compensation.
ACI
Filing Definitive Proxy Materials
ACI also announced that, in advance of S1s Special Meeting scheduled for September 22, 2011, it
is filing its definitive proxy materials with the Securities and Exchange Commission (SEC)
in connection with the solicitation of votes against proposals related to the proposed merger of
S1 and Fundtech Ltd. (Nasdaq: FNDT).
Continued Mr. Heasley, We look forward to joining with S1s shareholders in sending a message to
S1 in support of ACIs superior proposal. To preserve their opportunity to benefit from the
increased certainty and the considerable financial and strategic benefits of our proposed
transaction with S1, we urge S1 shareholders to vote AGAINST the Fundtech transaction.
ACI urges shareholders to vote the BLUE proxy card AGAINST the Fundtech transaction
today. S1 shareholders are encouraged to read the definitive proxy materials in their entirety as they
provide, among other things, a detailed discussion of ACIs superior proposal and the reasons
behind the ACI recommendation that shareholders vote AGAINST the proposed Fundtech
transaction.
In connection with the solicitation, ACI is mailing the following letter to S1 shareholders:
*** AN IMPORTANT NOTICE TO ALL S1 SHAREHOLDERS ***
PROTECT THE VALUE OF YOUR S1 INVESTMENT
VOTE AGAINST THE PROPOSED S1-FUNDTECH MERGER ON
THE ENCLOSED BLUE PROXY CARD TODAY
VOTE AGAINST THE PROPOSED S1-FUNDTECH MERGER ON
THE ENCLOSED BLUE PROXY CARD TODAY
August 25, 2011
Dear S1 Shareholder:
As the S1 special meeting approaches, we urge you to carefully consider what is at stake: S1 is
asking you to dilute your shares in order to acquire Fundtech in a transaction that we believe is
inferior to ACI Worldwides proposal. At the same time, S1 is denying you the opportunity to
realize a premium value for your investment through ACIs proposal to acquire S1 in exchange for
cash and stock, which we believe to be superior to the Fundtech transaction.
The choice is clearvote your BLUE proxy card AGAINST the proposed S1-Fundtech
transaction today.
THE PROPOSED S1-FUNDTECH TRANSACTION IS
NOT IN THE BEST INTERESTS OF S1 SHAREHOLDERS
NOT IN THE BEST INTERESTS OF S1 SHAREHOLDERS
ACI strongly believes that a vote AGAINST the proposed S1-Fundtech combination will:
| Preserve the opportunity for you to receive the premium price contemplated by ACIs cash and stock proposal, which ACI believes would provide S1 shareholders with significantly greater value than the Fundtech transaction. |
| Stop S1 from entering into a transaction that would result in a radical restructuring of S1s business, ownership and governance for no premium or cash to S1 shareholders. |
| Send a strong message to S1 that you the true owners of S1 want S1 to consider other alternatives for the company, including ACIs premium proposal. |
ACIS INCREASED PROPOSAL PROVIDES ADDITIONAL CERTAINTY AND DELIVERS
SIGNIFICANTLY GREATER VALUE
TO S1 SHAREHOLDERS
SIGNIFICANTLY GREATER VALUE
TO S1 SHAREHOLDERS
ACI remains committed to acquiring S1 Corporation and on August 25, 2011, submitted an enhanced
proposal that, given recent market volatility, provides S1 shareholders with additional certainty
for their investment. ACI has increased the cash component of its proposal. Under the enhanced
proposal, S1 shareholders would receive $6.20 per share in cash and 0.1064 ACI shares for each
share of S1 common stock they hold, assuming full proration. Based on ACIs closing stock price on
July 25, 2011, the last trading day prior to the public announcement of the ACI proposal, the ACI
enhanced proposal has a blended value of $10.00 per share, and based on the closing price of ACI on
August 24, 2011, the ACI enhanced proposal has a blended value of $9.29 per share. Given its stock
component, the value of the ACI proposal will fluctuate based on the market price of ACI shares.
Based on ACI | Based on ACI | |||||||
Stock Price as of | Stock Price as of | |||||||
Metrics | July 25, 2011 | August 24, 2011 | ||||||
Value of ACI Enhanced Proposal |
$ | 10.00 | $ | 9.29 | ||||
Implied Purchase Price Premium: 1 |
||||||||
1-Day Prior to Announcement $7.13 |
40.3 | % | 30.3 | % | ||||
90-Day VWAP $7.21 |
38.7 | % | 28.8 | % | ||||
52 Week High $7.75 |
29.0 | % | 19.9 | % |
1 | To closing sale price for S1 shares on July 25, 2011 |
By pursuing the Fundtech transaction, S1 is denying you the ability to benefit from the
substantial premium and immediate cash value inherent in the ACI proposal. Furthermore, a number
of Wall Street analysts have commented that they believe that the ACI proposal provides greater
value to S1 shareholders than the Fundtech transaction (emphasis added):
We suspect SONEs board will have a hard time justifying turning down a 33%
immediate premium, given that the alternative SONE/Fundtech merger of equals may take
several years to blossom.
(DA Davidson, July 26, 2011) *
In addition, we are encouraged by [ACIs] proposed acquisition of S1, which,
before synergies, could provide incremental and accretive cross-sell opportunities in
the retail and small financial institution verticals.
(Raymond James, July 26, 2011) *
We think the near term and more certain nature of ACIWs offer is more compelling
[than the proposed SONE merger with FNDT] ... Fifth, we think the cross sales would
be compelling, for example we think ACIWs international customers would be interested
in SONEs highly-regarded international cash management system.
(Stephens, July 27, 2011) *
ACI HAS A PROVEN TRACK RECORD OF DELIVERING
SIGNIFICANT VALUE TO ITS SHAREHOLDERS
SIGNIFICANT VALUE TO ITS SHAREHOLDERS
ACI has delivered impressive performance and enhanced returns for its shareholders. Over the past
five years, ACI has grown its business through a rigorous framework based on three phases of
development: control, profitability and growth. Through the successful execution of its control
and profitability phases, ACI has:
| Increased 60-month backlog to $1.6 billion in 2010, up $350 million since 2006; |
| Driven monthly recurring revenue to 68% in 2010, up nearly 29% since 2007; and |
| Increased Adjusted EBITDA margin to 21% in 2010, from 7% in 2007. |
ACI is now well into the profitability and growth phases, and has generated shareholder returns
greater than S1s, as well as other industry peers. In fact, over the three years ended July 25,
2011, the date prior to when ACI announced its proposal to acquire S1, ACI has produced shareholder
returns of approximately 90.2%. Over the same time period, S1 produced a NEGATIVE 9.2% return to
its shareholders!
* | Permission to use quotations was neither sought nor obtained |
3 Year Price | ||||
Company / Index | Performance1 | |||
ACI Worldwide |
90.2 | % | ||
S1 Corp |
(9.2) | % | ||
Bank / Pay Technology Peer Index 2 |
27.1 | % | ||
NASDAQ |
23.0 | % |
1 | Price performance from July 25, 2008 to July 25, 2011 | |
2 | Includes EPAY, FICO, FIS, FNDT, GPN, JKHY, LSE:MSY, ORCC, and TSS |
Underscoring the strength of its product portfolio, ACIs customer attrition rates for each of
the past four years have been in the low single digits as a percent of its 60-month backlog and any
attrition has primarily been the result of merger activity among customers rather than competitive
losses. Contrary to S1s assertions, we believe that S1 has not achieved its stated revenue gains
ACIs expense.
TOGETHER, ACI-S1 CREATES COST SAVINGS FAR GREATER THAN THOSE
CONTEMPLATED IN THE FUNDTECH TRANSACTION
CONTEMPLATED IN THE FUNDTECH TRANSACTION
The combination of ACI and S1 would create significant financial benefits, including considerable
cost savings, beyond what either company could achieve on its own. In fact, ACI expects to achieve
more than $24 million in cost savings, compared to the $12 million contemplated in the Fundtech
transaction.
ACI expects synergies to be achieved through the combination of corporate and public company
functions, reducing SG&A, streamlining product management and consolidating hosting infrastructure
and facilities. In addition, the combination of ACI and S1 would benefit from the leveraging of a
global cost structure, the reducing of fixed infrastructure and the cross-selling opportunities of
complementary product offerings across an expanded customer base.
To date, ACI has provided greater clarity on its projected synergies than S1 has for the Fundtech
transaction. Despite having performed extensive due diligence prior to announcing their merger,
S1 and Fundtech only this week included an additional $8.0 million in EBITDA, purportedly resulting
from revenue synergies, and have not provided any details to support this claimed potential
benefit.
ACI expects to realize its savings as early as the first quarter following closing of the
transaction much sooner than what is contemplated under the Fundtech transaction. As an S1
shareholder, you would be able to share in these cost savings and the resulting value creation.
Considering these greater synergies within a shorter timeframe, we strongly believe ACIs proposal
is demonstrably superior to the Fundtech transaction.
BY PURSUING THE FUNDTECH TRANSACTION,
S1 IS OBSTRUCTING SHAREHOLDER VALUE
S1 IS OBSTRUCTING SHAREHOLDER VALUE
The proposed Fundtech merger provides no premium and no cash to S1 shareholders.
While S1 has characterized the Fundtech transaction both as a merger of equals and as an
acquisition of Fundtech, we believe that both are incorrect. Based upon (1) the expected roles
to be played by S1s and Fundtechs management following the proposed merger, (2) the substantial
ownership of the combined company by Fundtechs largest stockholder following the merger, and (3)
the treatment of the merger as a change of control under the compensation arrangement of S1s
management, we believe that the proposed Fundtech merger looks much more like a change of control
rather than an acquisition of Fundtech or a merger.
In the four weeks between the announcement of the Fundtech transaction and ACIs superior proposal,
S1s stock price DECLINED by 5.4%, compared to an increase of 7.1% by the NASDAQ Index. However,
following the announcement of the ACI proposal, S1s stock price experienced its largest single day
improvement and an all-time high over the prior three years. Since then, S1s stock price has been
tied to the value of the ACI proposal and has generally avoided the declines experienced in the
overall market. Shareholders should consider given the 13.2% decline in the NASDAQ index over
the same time period at what price levels S1 would be trading from a $7.13 close on July 25,
2011, had ACI not made its proposal on July 26, 2011.
We believe that S1 overstated the potential value of the combined S1-Fundtech in its August 22,
2011 letter to shareholders. Do not be misled by S1s claims. Consider the following:
| The valuation analysis provided by S1 is based on an 11x EBITDA multiple. This is despite the fact that S1s financial advisor, Raymond James, used a multiple range of 8-10x EBITDA in the fairness opinion included in S1s proxy statement. |
| In its August 22, 2011 letter, S1 failed to account for the 11%-15% discount rate that Raymond James used to determine a present value for the shares in the fairness opinion included in S1s proxy statement. |
| S1s August 22, 2011, letter also included $8.0 million of EBITDA from purported revenue synergies for 2012; however, S1 did not include these purported synergies in announcing the Fundtech transaction and has provided no details to support these synergies. |
Janney Capital Markets concluded that the analysis in S1s August 22, 2011, letter was
disingenuous,* suggesting in an August 23, 2011, report that an 8.0x multiple is more appropriate
for S1:
The assumed 11.0x multiple is high. Fundtech is currently trading at 6.2x next 12 months
consensus EBITDA, S1 at 12.1x, and ACI Worldwide at 7.4x. By S1s own admission, their
*
Permission to use quotations was neither sought nor obtained
current stock price is over-valued and ACI and Fundtech is undervalued. We believe an 8.0x
multiple is more realistic ... Based on our adjustments, a combined S1/FNDT is worth $8.50
per
share ... Recommending S1 shareholders apply an 11.0x multiple in valuing the proposed
merger with Fundtech while assuming ACIW is worth only 7.4x is disingenuous. If 11.0x is
the right multiple, SONE shareholder[s] are better off taking the $9.50 per share from
ACIW.
(Janney Capital Markets, August 23, 2011)*
We believe that S1 is ignoring the compelling value of ACIs proposal and S1 is obfuscating the
facts in rejecting it without even discussing it with us. In short, S1 is denying you the
substantial premium and significant upside potential of the ACI proposal.
ACI REMAINS READY, WILLING & ABLE TO
CLOSE ITS SUPERIOR PROPOSAL
CLOSE ITS SUPERIOR PROPOSAL
We would strongly prefer to pursue a negotiated transaction with S1, notwithstanding the S1 Boards
August 2, 2011, rejection of our merger proposal. On August 25, 2011, ACI:
| Increased the cash portion of our proposal from $5.70 to $6.20 per share; |
| Reiterated our willingness to provide appropriate assurance of satisfaction of the Hart-Scott-Rodino (HSR) Act condition, including a divestiture commitment (if required) and substantial break-up compensation; |
| Reiterated that we have a fully executed commitment letter from Wells Fargo Bank, N.A., sufficient to fund the cash required by our proposal and to finance our ongoing operations and offered to provide a copy of such a commitment letter upon request; and |
| Requested that the Board reconsider our proposal. |
Unless and until the S1 Board commits to engage in meaningful discussions, however, we are prepared
to do what is necessary to make our proposal a reality.
There is a very clear path forward for ACI to act on its proposal and deliver immediate value to S1
shareholders. S1 claims that conducting due diligence remains an impediment; however, the only
thing standing in our way is S1s refusal to engage with ACI. As we have made clear to S1, ACI
stands ready, willing and able to promptly conduct confirmatory due diligence while also providing
S1 representatives with immediate due diligence access.
We have carefully reviewed all applicable regulatory requirements were we to acquire S1. The
combined company would continue to face intense competition from third-party software vendors, in
house solutions, processors, IT service organizations and credit card associations, including from
companies which are substantially larger and have substantially greater market shares than the
combined company would have. Moreover, the dynamic worldwide nature of the industry means that
competitive alternatives can and do regularly emerge. We believe that the transaction would not
enable us to obtain power in, or even a significant share of, any relevant market.
* | Permission to use quotations was neither sought nor obtained |
We believe that it would be in the best interests of S1s shareholders for the S1 Board to
authorize its management to meet with us in a timely fashion to discuss our merger proposal. We
remain confident that our proposed transaction could close as early as the fourth quarter.
THE FUTURE VALUE OF YOUR INVESTMENT HANGS IN THE BALANCE
DO NOT VOTE S1S PROXY CARD
VOTE YOUR BLUE CARD AGAINST THE S1-FUNDTECH TRANSACTION NOW
SEND A MESSAGE TO S1 AND MANAGEMENT
THAT YOU WILL NOT SETTLE FOR INFERIOR VALUE
THAT YOU WILL NOT SETTLE FOR INFERIOR VALUE
ACI is committed to taking the necessary steps to complete its proposed acquisition of S1. One of
the first steps to realizing this goal and benefitting from the significant financial and strategic
benefits of an ACI-S1 combination is to prevent the S1-Fundtech transaction from moving forward.
The best way to accomplish this is to vote AGAINST the Fundtech transaction on the
BLUE proxy card at the upcoming Special Meeting.
Your vote is IMPORTANT no matter how many shares you own. Please vote AGAINST the proposed
Fundtech merger TODAY by telephone, Internet or by signing, dating and returning the enclosed
BLUE proxy card in the postage-paid envelope provided.
If you have any questions concerning the ACI proposal or need additional copies of ACIs materials,
please contact Innisfree M&A Incorporated, toll-free at (888) 750-5834.
Sincerely,
/s/
Philip G. Heasley
President and Chief Executive Officer
Philip G. Heasley
President and Chief Executive Officer
Your Vote Is Important, No Matter How Many Shares You Own.
If you have questions about how to vote your shares on the BLUE proxy card,
or need additional assistance, please contact the firm
assisting us in the solicitation of proxies:
or need additional assistance, please contact the firm
assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
Stockholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call Collect: (212) 750-5833
Stockholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call Collect: (212) 750-5833
IMPORTANT
We urge you NOT to sign any White proxy card sent to you by S1.
We urge you NOT to sign any White proxy card sent to you by S1.
Wells Fargo Securities is serving as financial advisor to ACI, and Jones Day is serving as its
legal advisor.
About ACI Worldwide
ACI Worldwide powers electronic payments for more than 800 financial institutions, retailers and
processors around the world, with its broad and integrated suite of electronic payment software.
More than 90 billion times each year, ACIs solutions process consumer payments. On an average day,
ACI software manages more than US$12 trillion in wholesale payments. And for more than 160
organizations worldwide, ACI software helps to protect their customers from financial crime. To
learn more about ACI and understand why we are trusted globally, please visit www.aciworldwide.com.
You can also find us on www.paymentsinsights.com or on Twitter @ACI_Worldwide.
Forward-Looking Statements
This press release contains forward-looking statements based on current expectations that involve a
number of risks and uncertainties. All opinions, forecasts, projections, future plans or other
statements other than statements of historical fact, are forward-looking statements and include
words or phrases such as believes, will, expects, would and words and phrases of similar
impact. The forward-looking statements are made pursuant to safe harbor provisions of the Private
Securities Litigation Reform Act of 1995.
We can give no assurance that such expectations will prove to have been correct. Actual results
could differ materially as a result of a variety of risks and uncertainties, many of which are
outside of the control of management. These risks and uncertainties include, but are not limited
to the following: (1) that a transaction with S1 may not be completed on a timely basis or on
favorable terms, (2) negative effects on our business or S1s business resulting from the pendency
of the merger, (3) that we may not achieve the synergies and other expected benefits within the
expected time or in the amounts we anticipate, (4) that we may not be able to promptly and
effectively integrate the merged businesses after closing and (5) that the committed financing may
not be available. Other factors that could materially affect our business and actual results of
operations are discussed in our most recent 10-K as well as other filings available at the SECs
website at http://www.sec.gov. Forward-looking statements speak only as of the date they are made,
and we undertake no obligation to publicly update or revise any of them in light of new
information, future events or otherwise.
Certain Information Concerning The Participants
ACI and certain of its directors and officers may be deemed to be participants in any solicitation
of S1 shareholders in connection with the proposed transaction. Information about the participants
in the solicitation, including their interests in the transactions, is available in the proxy
statement that ACI has filed with the SEC on August 25, 2011 in connection with the special meeting
of S1s shareholders.
Available Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. INVESTORS AND SECURITY HOLDERS OF S1 ARE
URGED TO READ ACIS PROXY STATEMENT AND OTHER DOCUMENTS THAT HAVE BEEN AND WILL BE FILED WITH THE
SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors and security holders will be able to obtain free copies of all documents filed with the
SEC by ACI through the website maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by ACI will be available free of charge on ACIs internet website at
www.aciworldwide.com or by contacting ACIs Investor Relations Department at 646-348-6706.
# # #
CONTACTS
Investor Contacts:
|
Media Contacts: | |
Tamar Gerber
|
James Golden / Scott Bisang / Aaron Palash | |
Vice President, Investor Relations & Financial
|
Joele Frank, Wilkinson Brimmer Katcher | |
Communications
|
(212) 355-4449 | |
(646) 348- 6706 |
Art Crozier / Jennifer Shotwell / Scott Winter
Innisfree M&A Incorporated
(212) 750-5833
Innisfree M&A Incorporated
(212) 750-5833