Vista Equity Partners LLC agreed to buy DH Corp in a deal that values the Canadian financial-services provider at about C$2.73 billion (US$2.03 billion), aiming to create a financial technology powerhouse by combining it with Misys Ltd.
The C$25.5-per-share cash offer announced on Monday is an 11 percent premium on DH Corp’s closing price on Friday of C$23.04 per share and 36 percent above where shares closed on Dec. 5 before reports that the company was exploring strategic alternatives.
Including debt, the transaction for the Toronto-based company is valued at C$4.8 billion.
The takeover underscores a series of purchases intended to help DH Corp pivot into a financial-technology firm as demand for its traditional check-printing services declined.
In 2015, DH Corp agreed to buy payment-technology provider Fundtech Ltd for US$1.25 billion as part of that effort. The company was founded in 1875.
Vista is paying about 15.5 times DH Corp’s trailing 12-month earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg.
That is in line with similar deals in the industry, including Vista’s acquisition last year of software maker Solera Holdings Inc for US$6.5 billion including debt.
Hedge fund Elliott Management Corp’s private equity unit, Evergreen Coast Capital Corp, is helping finance the transaction by providing preferred equity, said a person familiar with the deal who asked not to be identified as the details are not public.
DH Corp shares rose 9.2 percent to C$25.16 in Toronto on Monday. Shares of DH Corp had fallen 37 percent in the year through Friday as the decline in its check-making business accelerated faster than anticipated.
The company’s services are used by 8,000 banks, specialty lenders, credit unions, governments and corporations, according to its Web site. It has more than 5,500 employees worldwide, with revenue of almost C$1.7 billion last year.
Vista, which has offices in Austin, Texas; Chicago; and San Francisco, focuses on software and technology investments. It pulled the planned initial public offering of Misys in October last year, citing market conditions.
Vista took Misys private in 2012 for £1.3 billion (US$1.6 billion).
The Vista-DH Corp deal brings the total value of private equity transactions involving Canadian targets this year to about US$3.5 billion, slightly above the US$3.1 billion announced during the same period last year, according to data compiled by Bloomberg.
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