Deutsche Börse to table bid for Simcorp
27 April 2023 Germany, Luxembourg, Denmark
Image: AdobeStock/cineberg
Deutsche Börse has entered into a binding agreement with Simcorp, through which the German market infrastructure giant will make an cash offer for 100 per cent ownership of the Copenhagen-headquartered buy-side technology company.
Simcorp’s board of directors indicate that they intend to recommend to company shareholders that they accept Deutsche Börse’s offer. Members of Simcorp’s executive management board and board of directors have agreed irrevocably to accept the offer or otherwise sell their shares to Deutsche Börse.
The public takeover offer will be for all Simcorp shares, with the exception of treasury shares, at DKK 735.0 per share (€98.6 per share), which puts a valuation of €3.9 billion on the target company.
Deutsche Börse says, in its public statement, that this represents a 39 per cent premium to the Simcorp closing price on 26 April and a 45 per cent premium to the 3-month volume weighted average price.
The two companies indicate that the Simcorp purchase will complement Deutsche Börse’s existing data and analytics businesses and lay the foundations for a full front-to-back investment management solutions segment, including the addition of Simcorp’s investment management software-as-a-service (SaaS) and business-process-as-a-service (BPaaS) capability to the exchange group’s stable of services.
This also builds on the existing cooperation between Simcorp and Deutsche Börse subsidiary Qontigo established in 2021.
Deutsche Börse intends to combine Qontigo with its existing investor communication arm ISS and has reached an agreement in principle with US growth equity investor General Atlantic to create a leading ESG, data, index and analytics provider, with General Atlantic becoming sole minority shareholder of the Qontigo entity.
They note that this will enable them to explore new value-generating options in capital markets, including the potential for an IPO at some point in the medium term.
By purchasing Simcorp, the proposed combination of Qontigo and ISS will create the building blocks for Deutsche Börse to accelerate the development of its Data and Analytics segment and its intended Investment Management Solutions segment.
Deutsche Börse will finance the proposed offer with cash and debt and has established a fully underwritten bridge facility with Morgan Stanley which is likely to be refinanced by a mix of existing cash and fixed income capital market instruments.
Commenting on the proposed deal, Deutsche Börse CEO Theodor Weimar says: “Over the last couple of years, we have significantly enhanced our data and analytics capabilities with a strong strategic focus to further develop within the investment management business.
“SimCorp A/S is a perfect fit strategically and culturally. It is one of the leading global investment management software providers, serving the largest asset managers and asset owners worldwide. Through our existing partnership, we have come to know and appreciate the management of SimCorp A/S and the strategic transformation they have initiated, backed by a highly competent team of skilled employees.
“In addition to the SimCorp A/S transaction, we have decided to merge ISS and Qontigo. Both transactions will bring long-term growth, sizeable and tangible synergies, and a significant increase of our recurring revenues. We would be delighted to welcome SimCorp A/S, which has been a trusted business partner for many years, to Deutsche Börse Group and to embark on this exciting journey together.”
Peter Schütze, chair of the board of directors of SimCorp A/S, comments: "The Board of Directors finds that the offer from Deutsche Börse AG represents attractive value for the shareholders of SimCorp A/S as the company accelerates its transformation to a full-scale SaaS and BPaaS provider to deliver sustained long-term profitable growth.
“Deutsche Börse AG is well-positioned to contribute to the realisation of the long-term potential of SimCorp A/S, and the offer is a clear testament to the strong position and prospects of SimCorp A/S in a global investment industry undergoing fundamental changes and seeing rising demand for integrated technology platforms."
Simcorp’s board of directors indicate that they intend to recommend to company shareholders that they accept Deutsche Börse’s offer. Members of Simcorp’s executive management board and board of directors have agreed irrevocably to accept the offer or otherwise sell their shares to Deutsche Börse.
The public takeover offer will be for all Simcorp shares, with the exception of treasury shares, at DKK 735.0 per share (€98.6 per share), which puts a valuation of €3.9 billion on the target company.
Deutsche Börse says, in its public statement, that this represents a 39 per cent premium to the Simcorp closing price on 26 April and a 45 per cent premium to the 3-month volume weighted average price.
The two companies indicate that the Simcorp purchase will complement Deutsche Börse’s existing data and analytics businesses and lay the foundations for a full front-to-back investment management solutions segment, including the addition of Simcorp’s investment management software-as-a-service (SaaS) and business-process-as-a-service (BPaaS) capability to the exchange group’s stable of services.
This also builds on the existing cooperation between Simcorp and Deutsche Börse subsidiary Qontigo established in 2021.
Deutsche Börse intends to combine Qontigo with its existing investor communication arm ISS and has reached an agreement in principle with US growth equity investor General Atlantic to create a leading ESG, data, index and analytics provider, with General Atlantic becoming sole minority shareholder of the Qontigo entity.
They note that this will enable them to explore new value-generating options in capital markets, including the potential for an IPO at some point in the medium term.
By purchasing Simcorp, the proposed combination of Qontigo and ISS will create the building blocks for Deutsche Börse to accelerate the development of its Data and Analytics segment and its intended Investment Management Solutions segment.
Deutsche Börse will finance the proposed offer with cash and debt and has established a fully underwritten bridge facility with Morgan Stanley which is likely to be refinanced by a mix of existing cash and fixed income capital market instruments.
Commenting on the proposed deal, Deutsche Börse CEO Theodor Weimar says: “Over the last couple of years, we have significantly enhanced our data and analytics capabilities with a strong strategic focus to further develop within the investment management business.
“SimCorp A/S is a perfect fit strategically and culturally. It is one of the leading global investment management software providers, serving the largest asset managers and asset owners worldwide. Through our existing partnership, we have come to know and appreciate the management of SimCorp A/S and the strategic transformation they have initiated, backed by a highly competent team of skilled employees.
“In addition to the SimCorp A/S transaction, we have decided to merge ISS and Qontigo. Both transactions will bring long-term growth, sizeable and tangible synergies, and a significant increase of our recurring revenues. We would be delighted to welcome SimCorp A/S, which has been a trusted business partner for many years, to Deutsche Börse Group and to embark on this exciting journey together.”
Peter Schütze, chair of the board of directors of SimCorp A/S, comments: "The Board of Directors finds that the offer from Deutsche Börse AG represents attractive value for the shareholders of SimCorp A/S as the company accelerates its transformation to a full-scale SaaS and BPaaS provider to deliver sustained long-term profitable growth.
“Deutsche Börse AG is well-positioned to contribute to the realisation of the long-term potential of SimCorp A/S, and the offer is a clear testament to the strong position and prospects of SimCorp A/S in a global investment industry undergoing fundamental changes and seeing rising demand for integrated technology platforms."
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