FIS to Buy Metavante for $2.94B

In a seismic deal for bank processing, Fidelity National Information Services Inc. agreed today to acquire Metavante Technologies Inc. in a stock transaction valued at $2.94 billion.

Like FIS, Metavante provides processing services to financial institutions. Metavante was started by Marshall & Ilsley Corp. in 1964. M&I spun off Metavante in 2007.

Metavante stock (MV) has largely been flat over the last year, which is a feat in and of itself. Last year MV earned about $230 million before taxes and other unusual expenses, implying that FIS paid about 12.8 times trailing earnings. That would be a rich price considering that we are in the midst of a deep recession both on the macro level and in financial services specifically. Clearly, FIS is bullish about its prospects and the prospects for financial services broadly.

Some facts about the acquisition, according to the companies:

* The pro forma enterprise value of the combined company is approximately $10 billion;
* In 2008, the companies generated pro forma combined revenue of $5.2 billion;
* 2008 combined adjusted EBITDA of $1.3 billion;
* 2008 combined free cash flow of more than $500 million; and
* FIS anticipates cost synergies of approximately $260 million.

Banc of America Securities LLC and Goldman, Sachs & Co. acted as financial advisors to FIS and Wachtell, Lipton, Rosen & Katz provided legal counsel. Barclays Capital acted as financial advisor to Metavante, while Kirkland & Ellis LLP and Quarles & Brady LLP provided legal counsel.

Conference Call and Webcast
FIS and Metavante will host a joint webcast to discuss the transaction today at 11:00 a.m. ET. The webcast is accessible at www.fidelityinfoservices.com and at www.metavante.com. The accompanying slide presentation will also be available on each company’s website. A replay of the audio presentation will be available on the websites or by calling 888-203-1112 (domestic) or 719-457-0820 (international), and entering passcode 1456372. The replay will be available for four weeks following the conference call.

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