Open Solutions Inc. shelved plans for an initial public offering and accepted a buyout bid last week from HNC Software Inc. of San Diego.
HNC, which specializes in artificial intelligence software for detecting fraud and other predictive functions, will issue three million shares of common stock to buy Open Solutions, a provider of client/server core processing software for community banks.
Shares of HNC closed Friday at $41.875, which would make the deal worth $125 million. It is expected to close Nov. 30.
Open Solutions, of Glastonbury, Conn., was in the midst of a 10-day road show for potential investors in August when "the market dropped a thousand points," said John L. Person, president and chief operating officer. "Our decision was assisted by the market."
HNC, with $78 million in revenue through the first six months of 1998, bought Financial Technology Inc., a Chicago-based provider of general ledger and asset-liability management software to community banks, for $16.5 million this year.
An HNC-Open Solutions combination could offer community banks intriguing possibilities, Mr. Person said. HNC can add capabilities such as customer profitability analysis to Open Solutions' system.
"I think we will be the envy of a lot of people," Mr. Person said. "There is no one in the market with this capability."