Financial systems vendor Management Technologies Inc. announced last week that it had signed a binding agreement to acquire a securities trading systems business from Digital Equipment Corp.
Under the terms of the agreement, Management Technologies will pay Digital about $10 million for the United Kingdom-based unit, called Desisco.
The Desisco business consists of a suite of software called DECtrade, a system for distributing real-time financial information within trading rooms, as well as a number of complementary applications for trader analytics and decision support.
Management Technologies officials said DECtrade has an installed customer base of 50 banks in 20 countries, with a total of about 6,000 trading positions worldwide.
Customers include some of the biggest banks in Europe, including ABN Amro Bank in the Netherlands and Union Bank of Switzerland.
Officials at New York-based Management Technologies said they expect the acquired unit to add over $15 million to its annual revenues.
The acquisition is the second this year for New York-based Management Technologies. Last July, the company acquired the Winter Partners international banking systems division from Credit Suisse for $12.5 million.
Management Technologies' chairman and chief executive officer Anthony J. Cataldo said Desisco and its 120 employees will be run as a separate operating division of the holding company.
Mr. Cataldo said the deal was completed relatively quickly, as he learned the Digital division was up for sale only about a month ago.
"After we acquired Winter Partners, which has a lot of software running on Digital hardware, I met last month with Digital CEO Robert Palmer," Mr. Cataldo said.
"He said, `Too bad I didn't catch you a little earlier, because we've got a letter of intent [to purchase Desisco!, and that probably would have been a good fit for you.'"
Mr. Cataldo said he persuaded Mr. Palmer to hold off on closing the deal for three weeks so Management Technologies could look at the unit's books.
"Sungard [Data Systems Inc.] and ACT [International Systems Inc.! both put in bids, and actually came in higher than us, but our customer base in back-office products included some of the same banks we already had, so they felt it was a better fit."
A Digital Equipment spokesman said the sale was part of the computer company's strategy of "moving to a fully partner-based approach for the provision of trading room products," noting that Management Technologies' international banking products unit has already been a software developer for Digital Equipment hardware for many years.
Mr. Cataldo said the acquisition signals his interest in acquiring so-called front-office banking software, as opposed to the accounting and transaction processing systems used for international banking, disciplines where Management Technologies first made its mark.
"With technology the way it is today, it's very difficult to separate your back office and your front office, as well as your domestic side of your bank from your international side," he said.
"My intent is to have an offering that includes solutions for both the back office and the front office."
He added that his next acquisition target will be in the retail banking technology area.
"Retail banking used to be held hostage to the notion that it was just a domestic activity, like opening a CD" he said, adding that he expects more retail banks will be adding international banking products, such as foreign exchange, and investing in overseas capital markets.
"Nothing's just back-office or wholesale banking anymore, everything's retail."
The Desisco acquisition was announced one week after publicly held Management Technologies reported a profit of $819,568 for the second fiscal 1995 quarter ended Oct. 31 - a big turnaround for a company that recorded a whopping $8 million loss for fiscal 1994 before acquiring Winter Partners.
