S1 Ends Fundtech Merger, Still Rebuffs ACI Offer

Last week, Jersey City, N.J.-based payments company Fundtech announced its intention to end the merger agreement that it had previously set up with S1 Corporation in order to accept an acquisition offer from Chicago-based private equity firm GTCR. S1, an Atlanta-based payments provider, recently responded to the news by agreeing to terminate its merger with Fundtech for an $11.9 million fee, to be paid by GTCR. The Oct. 13 meeting during which S1 stockholders were scheduled to vote on the merger has been cancelled.

S1's board of directors says that despite the end of its merger agreement with Fundtech, the company is not interested in taking the acquisition offer that New York-based international payments systems provider ACI Worldwide has been pursuing since July. The S1 board said, in a news release announcing its position on the matter, that "the exchange offer is NOT in the best interests of S1 or its stockholders and recommends that S1 stockholders NOT tender their S1 shares pursuant to the exchange offer." The board listed the reasons for its position as follows:

• The exchange offer is subject to significant conditions that may prevent its consummation.
• The exchange offer provides uncertain consideration and value for the shares of S1 common stock.
• ACI must obtain debt financing in order to acquire S1 shares in the exchange offer.
• Unlike ACI's original acquisition proposal, the exchange offer is not expected to be tax free to S1 stockholders with respect to the receipt of ACI shares.
• ACI launched the conditional exchange offer despite S1's good faith efforts to discuss the terms of ACI's previous unsolicited acquisition proposal.