S1 Corp. said Monday that it would buy 10.5 million of its shares through the "modified Dutch auction" that it announced in October.
The $55 million buyback, at $5.25 a share, came in at the top of the range that the Atlanta software vendor had set for the plan; it is for 14.7% of S1's shares outstanding.
Nikolai D. Fisken, an analyst at Stephens Inc. in Little Rock, Ark., called Monday's announcement "an end to a chapter in the S1 novel." Since March the company has been under pressure from an activist shareholder to sell itself.
Noting from the company's announcement that shareholders had tendered more than 14 million shares and that the tender price was close to offers that had been made during a review of "strategic alternatives" that began in May, Mr. Fisken said, "that's the market's price."
The formal tender offer, filed in mid-November, described months of efforts that the company made to find a buyer, either a financial investor or a strategic buyer, such as a larger financial software vendor that could have incorporated S1's products into its own offerings.
S1's financial advisers, the investment bank Friedman, Billings, Ramsey Group Inc. and the law firm Hogan & Hartson LLP, contacted more than 60 prospects for a strategic deal. As the company worked through them, the number of potential bidders was narrowed to 25, then seven, and four. At one point in June, a group of managers, including James S. "Chip" Mahan 3rd - S1's founder, chief executive, and chairman - considered joining a bid to take the company private.
By the end of July, S1 was down to three finalists - a financial investor, a strategic buyer that wanted only part of the company, and another strategic buyer that would take it all for $5.50 a share worth of stock. Directors decided to focus on a strategic sale of the entire company.
While talks were under way, a new financial buyer emerged with an offer of $5.25 to $5.50. As talks with the strategic buyer stretched into September, S1's directors began talks with the newcomer. But the more the financial buyer looked at the company's books, the lower its offer went, to $5.40 on Sept. 29, a range of $5 to $5.20 on Oct. 11, and $5 on Oct. 16.
Meanwhile the financial buyer had gone on to a different deal, dimming that prospect.
S1's shares closed at $5.05 on Friday and traded at $5 even at midday Monday. Company representatives were not available for interviews Monday.
The maker of Internet banking software and a suite of customer-contact applications has said it would pay for the shares with cash and short-term investments. Under the offer's terms it will first buy "odd lots" of less than 100 shares from holders who tendered all their shares, then prorate the remainder among other stockholders who tendered shares.
S1 announced its buyback plan Oct. 23, and Mr. Mahan stepped down as chairman and CEO. The company named John W. Spiegel, a director, as chairman that day and Johann Dreyer, the group president of its Postilion payment processing unit, was elevated to CEO on Nov. 2.
The company agreed to repurchase Mr. Mahan's shares at the tender price. At the time of the tender offer, Mr. Mahan had options to buy 2.4 million shares, of which 130,000 were exercisable at a profitable rate at the time. But he was not obliged to sell under the agreement.
Also unknown are the plans of the activist shareholder that set the wheels in motion, the New York investment management firm Ramius Capital Group LLC. An executive of the firm joined the company's board in May and was involved in the review. S1 said in its tender offer that none of its current directors planned to tender stock.
A representative of Ramius did not return a phone call requesting comment Monday.
