City agencies square up for Misys takeover bid

Four City agencies are going head to head in a rare M&A battle over the future of FTSE 250 banking software company Misys, as the UK capital markets show signs of life.

City wakes up: several potential M&A deals have given hope to City agencies that markets are picking up
City wakes up: several potential M&A deals have given hope to City agencies that markets are picking up

Last month Swiss software firm Temenos agreed broad terms to buy its UK rival in a deal worth around £1.3bn. Since then, private equity groups Vista Equity Partners and CVC Capital Partners have separately stated their interest in the company, while on Monday Temenos pulled out of takeover talks.

Reports suggested Temenos could still return to the table, meaning three separate suitors for Misys are potentially still in play.

The unfolding saga is a welcome boost to City PR, largely starved of big ticket M&A battles since the start of the financial downturn.

Misys has City giant Brunswick handling comms, while Temenos is using Hudson Sandler. In recent days they have been joined by Capital MSL working on the Vista Equity Partners bid and newly established Pendomer Communications working for CVC Capital Partners and ValueAct Capital Master Fund, the largest shareholder in Misys.

The battle suggests the UK M&A market could finally be thawing. The likely £23bn merger of Glencore and Xstrata will boost Finsbury, working for Glencore, and Aura Financial and StockWell Group, both working for Xstrata.

Meanwhile, Maitland has won a mandate to act for US logistics firm UPS in its possible offer for Dutch company TNT Express. UPS is reportedly readying a new bid having had a €4.9bn offer rebuffed last month.

Additionally, Finsbury client Vodafone is this week said to be weighing up a £1bn bid for Cable & Wireless Worldwide, which has previously used FTI Consulting.

These potential deals are vital for City PR firms, which have seen their margins eaten into by a dramatic fall in UK M&A. Interestingly, the activity coincides with new UK takeover rules introduced late last year that reveal the precise fees City PR firms charge.

So far there have been few significant deals to shed light on fee levels, but early data suggests that the billings are wildly divergent.

One of the first major deals under the new rules last Oct-ober was US firm Colfax’s £1.5bn takeover of UK-listed Charter International. Brunswick earned £1.1m from Colfax, while Citigate picked up £300,000 working for Charter.

Conversely, the £253.5m January acquisition of Collins Stewart Hawkpoint by Canaccord Financial saw FTI Consulting pick up £90,000 acting for the selling firm, while Buchanan Communications earned £30,000 for the buyer.

Elsewhere, College Hill earned £110,000 working on China Guangdong Nuclear Power Group’s £632m purchase of AIM-listed mining firm Kalahari Minerals, while St Brides Media & Finance earned £30,000 working for Kalahari.

The Wall Street Journal wrote suggested that M&A in the UK was set to pick up in 2012, with one source pointing to the ‘staggering £180bn being held on corporate balance sheets’.

However, City PR bosses were more circumspect despite the encouraging signs, with a number telling PRWeek that M&A appetite below the headline grabbing multi-billion pound deals remained relatively weak.

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