S1 Corp.'s board urged shareholders Monday to vote in favor of the company's pending merger with Fundtech Ltd. because it says the deal will propel the technology vendors ahead of their competitors for payments software.
The board also urged shareholders once again to vote against an unsolicited acquisition bid that the vendor ACI Worldwide Inc. made for S1 in effort to disrupt the Fundtech deal, arguing that ACI's proposal faces significant regulatory and financing hurdles.
"S1 also does not believe ACI's assertion that S1, if acquired, would continue its current growth trajectory because a portion of S1's growth has come at ACI's expense," the board wrote in a letter included in proxy materials filed with the Securities and Exchange Commission for a special stockholders meeting on Sept. 22 to vote on the deal.
"Since 2009, S1 has signed 22 of ACI's customers. Those customers generated $21.1 million in revenue for S1 in 2010 and $16.3 million in the first six months of 2011. Clearly, ACI fears a greater loss in business when facing an even stronger combined S1/Fundtech," the board wrote.
S1's planned merger with Fundtech would result in annual cost savings of $12 million by the end of 2012 and create a company that has a larger global reach with a strong presence in Latin America, Africa, India and Western Europe, the board wrote.
S1, of Norcross, Ga., and Fundtech, of Jersey City, N.J., both provide electronic banking software to financial institutions. They announced a deal to combine in a "merger of equals" in June, saying the combination would help them cross-sell more products to their customers, expand their geographic reach and put them in a more competitive position.
In July, ACI, of New York, announced a separate plan to buy S1 for $9.50 per share, or $540 million, arguing its deal would more value to S1's shareholders. S1's board earlier this month rebuffed ACI's offer, though ACI last week filed a letter with the SEC saying it is still committed to its offer.