The recommended GBP0.60 per share cash offer for Financial Objects - valuing the group at GBP27.2m (USD49m) - was made on 3 July, but required shareholder and regulatory approval before it could be finalised. Shareholder approval was obtained at an EGM held on 11 August and the last legal formalities were completed on 10 September, when ownership transferred to Temenos. From 11 September, when Financial Objects' shares were de-listed from the Alternative Investment Market (AIM), Temenos began incorporating the results of Financial Objects into its consolidated group accounts.
Expected contribution from acquisition
USD 2008 FY 2009
Licences (m) 2.0
Revenue (m) 11.0 40.0
EBITA adjusted (m) 1.6 9.4
EPS adjusted* 0.01 0.08
For the remainder of 2008, Temenos expects the acquisition to contribute USD11m to group revenues - taking outlook for group revenues in 2008 to USD444m, a 34% increase on 2007 - and raise adjusted* EPS by USD0.01, increasing full year outlook to USD1.40.
In 2009, Temenos expects the acquisition to add USD40m to revenue and USD0.08 to adjusted* EPS. This estimate assumes that around USD3m of cost synergies can be achieved in the first year - principally through the termination of PLC** expenses and the removal of duplicated costs - rising to approximately USD5m in the second year as some of the deferred savings materialise. What is not included in the estimate, however, is the impact from revenue synergies, even though it is likely that these will begin to manifest themselves in 2009.
Andreas Andreades, CEO, Temenos, says: "It gives me great pleasure to announce that Temenos' acquisition of Financial Objects has closed successfully. The combination of Temenos and Financial Objects creates a group that is bigger, stronger and more profitable and, therefore, better placed to take advantage of the significant market potential that exists for third-party core banking software.
Even before any cross-selling revenues, we expect the acquisition to materially enhance our 2009 earnings and so this is clearly a value-enhancing deal for our shareholders. What is more, by this year end, we will have put in place the necessary restructuring (and borne the costs of this) to ensure that we deliver on our cost saving plans for 2009.
Following on from the Informer acquisition in July and the Actis.BSP deal last year, we are demonstrating that we can and will continue to successfully complement strong organic growth without compromising shareholder value or losing focus. For me, this underscores both our ambition and the potential for Temenos to lead the core banking software market over the long term."