Almost 18 Months after the takeover from Odyssey Financial Technologies, Temenos announced to be considering “strategic combination with Misys plc to be effected by way of an all share merger”.
Probably for compliance sake, since both companies are listed, the Misys press release cautiously provide further information “Discussions are continuing and there can be no certainty that a transaction will ultimately take place, nor as to the terms on which any transaction might be constituted. A further announcement will be made in due course.”
Besides shaking the Banking Consultancy world, the merge would create a small giant in the Software Industry and a number one in the niche of the Banking Systems. Temenos boasts over 1000 Banks using T24, Misys with a much larger array of products count with 1200 Financial Clients. Their teams are more or less equally seized with approximately 4000 people each company.
Surely a merge will produce massive cost reductions in terms of Operations, Sales and Professional Services. Midterm, one could consider the synergy of the R&D thru intensive triage of technologies and products, knowing that Misys will probably get fitter out of the process, since the list of loose products on its side is large.
Doubtless, booths software editors are facing alike challenges: quasi eternal delays in decision-making in the Banking Industry, elongated sales process, the investment banks undergoing rationalisation and cutting costs, and in addition the Buy-side business faces an uncertain outlook.
Nonetheless, the market opportunities are not uninteresting: since financial institutions are still seeking leverage and efficiency by consolidating IT systems and vendors. Regulatory requirements are now driving investments. Mid-sized banks in growth regions are looking for integrated capital markets and banking systems.
In case the Merge turns out a reality, “#Mysemenos” will certainly become the omnipresent strategic partner of the Banking Industry, becoming itself a very attractive takeover candidate for Software giants like Oracle or SAP or even IT monsters like IBM, HP or Tata.
It’s too early to say whether the overdue consolidation of the Banking Software Industry will have positive impact on the desperately needed productivity of the Banks, specially among Investment and Private Banking Institutions.
The dirty and well known secret is that big M&A seldom workout, at least in the short term. —
Let’s wait and see!!!
Sunday Update: For further discussion and views and insights exchange I’ve created a group #Mysemenos on Linkedin.: