Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of SS&C Technologies Holdings Inc (SSNC 0.61%) rose 10% Tuesday after the financial software and services company announced it will acquire Advent Software (ADVS.DL) for an enterprise value of roughly $2.7 billion.
So what: That equates to a purchase price roughly $44.25 per share plus the assumption of Advent's debt. Both the acquisition and refinancing of debt will be funded by SS&C with $3 billion of debt financing, cash on hand, and approximately $400 million of equity.
Advent, for its part, released solid fourth-quarter results only yesterday. The company generated revenue of $397 million in 2014, and ended the year with over 4,300 customers in 50 countries ranging from asset managers, hedge funds and administrators, prime brokers, and wealth advisory firms. All in all, its complementary nature and status as a significant competitor in the space seems to make Advent a shoe-in for joining SS&C's core business. This also marks a continuation of SS&C's long-held strategy of pursuing growth by acquisition.
"SS&C is acquiring a pre-eminent business in the financial technology industry and this is an acceleration in the progression to cloud technology," stated SS&C CEO Bill Stone. "The acquisition reinforces our focus on our clients."
Now what: Finally, SS&C expects the transaction to not only generate annual cost synergies of approximately $45 million by the end of three years, but also result in "meaningful revenue synergies to be derived over time." As a result, SS&C now expects to deliver fiscal year 2016 earnings per share between $3.05 and $3.15. Keeping in mind both companies are already forces to be reckoned with in their industry, if SS&C closes the deal it should leave them better-positioned than ever to lead the market going forward.
