Sunday, July 22, 2007

Hit #173 (Bisys)

Bisys Group (BSG) is being acquired by Citigroup for around $1.5 billion in cash. A special dividend of 15 cents/share was also announced subject to completion. The total offer price is a discount of 12.8% to my average cost of $13.75.

The offer is unusually low, even for a company like Bisys that may have more regulatory troubles ahead. Bisys has already agreed to a $66.5 million settlement with shareholders over allegations of misleading financial statements. There has also been a $25 million fine by the SEC over improper accounting and reporting. Having been a customer of Bisys myself, I have nothing positive to say about the experience. Given all this, it is surprising that no executive has landed behind bars.

The second largest shareholder in the company, Okumus Capital, is opposing the deal saying it signficantly undervalues the company - I couldn't agree more. It would be interesting to find out what kind of sweet package to Bisys executives got them to agree to a deal that is clearly not in the interests of the shareholders.

I had mentioned Bisys in a couple of posts a long time ago - once when Intercept (Hit #22) was bought out, and later when NYSE and Archipelago merged.

A related player I would highly recommend at this point is Broadridge Financial (BR). Barring a Bisys-like sellout, this should be bought for a considerable premium down the road. I mentioned Broadridge earlier when Ceridian (Hit #169) was acquired.

Previous hit - Cytyc (#172)


Post a Comment

<< Home