SS&C Technologies Holdings, Inc. (“SS&C”) (Nasdaq: SSNC), a leading global provider of financial services software and software-enabled services, and Advent Software, Inc. (“Advent”) (Nasdaq: ADVS), a leading provider of software and services for the global investment management industry, recently announced that the Companies have entered into a definitive agreement wherein SS&C will acquire Advent. Under the terms of the agreement, SS&C will purchase Advent for an enterprise value of approximately $2.7 billion in cash, equating to $44.25 per share plus assumption of debt.
Advent has more than 4,300 customers including asset managers, hedge funds, fund administrators, prime brokers, family offices and wealth management advisory firms, located across more than 50 countries worldwide. Headquartered in San Francisco, California, with more than 1,200 employees worldwide, Advent generated revenues of $397 million for the 12 months ended December 31, 2014.
The combination of SS&C’s expertise and technology with Advent’s comprehensive offering enables SS&C to build on its mission to offer the greatest depth of expertise, software technology and services. The transaction capitalizes on a broad trend: global financial services customers’ increased interest in outsourcing solutions. Advent increases SS&C’s business and geographical diversification and scale and adds a stable and attractive revenue base, as demonstrated by its 90% recurring revenue rates over the last five years. Meanwhile, the companies’ combined solutions and services will drive stronger long-term growth for the pro forma business and present significant cross-sell and cost savings opportunities.
The transaction represents a continuation of SS&C’s proven growth strategy through acquisitions in the financial services software and software-enabled services industries, as evidenced by 40 acquisitions to date including GlobeOp in 2012 and DST Global Solutions in 2014.
“The acquisition of Advent is a defining moment in the investment technology, services and support industry. I am pleased to share this news, especially with Advent customers whom we are committed to serving. We look forward to speaking with all customers over the coming weeks and months. SS&C is acquiring a pre-eminent business in the financial technology industry and this is an acceleration in the progression to cloud technology,” said Bill Stone, Chairman and Chief Executive Officer of SS&C. “The acquisition reinforces our focus on our clients. Advent Software, combined with SS&C’s complementary offerings in SaaS, middle office services, regulatory solutions, mobile applications and FIX, is unmatched. One Advent product, Geneva®, already has 2,400 SS&C personnel using it every day. Black Diamond® is a premier product in the registered investment advisor market and we look forward to continuing Black Diamond’s success. Advent Portfolio Exchange®, Axys®, Moxy®, and the entire product portfolio add depth and breadth. We are excited to have Pete Hess and his team and the entire Advent community. We intend to continue our combined strengths in innovation, client focus and employee opportunity.”
“This is a very exciting transaction for our shareholders, clients, and employees. I believe the combination of Advent and SS&C will create a powerful team that can take a big leap forward in the value proposition we offer the industry,” said Pete Hess, Chief Executive Officer of Advent. “SS&C has a rich history of delivering a leading combination of people, process, and technology that complements Advent’s existing solutions, and the additional scale and resources we will have as a united team will accelerate our ability to provide the industry with game-changing solutions for investment managers around the world.”
Cost synergies derived from this transaction are estimated to be approximately $45 million of annual savings achieved by the end of three years, and SS&C expects meaningful revenue synergies to be derived over time. Altogether, SS&C expects the transaction to be accretive to its overall financial profile, enhancing top line growth, margins, and cash flow and non-GAAP earnings per share. Given the highly complementary nature of the acquisition, the specific cost synergies and the significant cash flow available for deleveraging, SS&C expects to deliver FY 2016 EPS of between $3.05 to $3.15.
SS&C plans to fund the acquisition and refinancing of existing debt with $3.0 billion of debt financing and cash on hand and approximately $400 million of equity. For the twelve months ended December 31, 2014, adjusted EBITDA for the combined pro forma entity is expected to be approximately $500 million with synergies. SS&C expects leverage to be approximately 5.3x net debt to last twelve months pro forma EBITDA at closing, and anticipates rapid deleveraging through the strong cash flow of the combined business. Morgan Stanley and Deutsche Bank have provided fully committed debt financing.
Both SS&C and Advent’s Board of Directors have unanimously approved the transaction, which is expected to close in the second quarter of this year, subject to Advent stockholder approval, clearances by the relevant regulatory authorities and other customary closing conditions.
Morgan Stanley and Deutsche Bank acted as financial advisors and Davis Polk & Wardwell acted as legal advisor to SS&C.
Qatalyst Partners acted as financial advisor and Wilson, Sonsini, Goodrich & Rosati acted as legal advisor to Advent.
