Financial services software provider SS&C Technologies Holdings Inc. (Nasdaq: SSNC) has agreed to purchase rival DST Systems Inc. (NYSE: DST) in an all-cash transaction for $84 per share plus assumption of debt, or approximately $5.4 billion.
DST is a global provider of specialized technology, strategic advisory, and business operations outsourcing to the financial services and healthcare industries. Headquartered in Kansas City, Missouri, with more than 14,400 employees worldwide, DST generated pro forma revenue of $2.3 billion for the 12 months ended September 30, 2017.
The transaction increases SS&C’s scale, with approximately $3.9 billion in combined pro forma revenue and 13,000 clients. Additionally, the transaction expands SS&C’s footprint into the US retirement and wealth management markets and adds 110+ million investor positions across DST’s client base.
“We are pleased to enter into this agreement with SS&C, which benefits DST shareholders and supports the continued success of our clients,” said Steve Hooley, chairman, president, and chief executive officer of DST. “SS&C has a rich history of delivering best-in-class technology that complements DST’s existing solutions, and, as part of SS&C, we will be able to advance our extensive, multi-year strategic transformation.”
SS&C expects $150 million of run-rate cost savings annually, achieved by 2020. The company said that the transaction is expected to be immediately accretive to its adjusted earnings per share before synergies, and is expected to result in mid-teens earnings growth in 2019.
SS&C plans to fund the acquisition and refinance existing debt with a combination of debt and equity. For the 12 months ended September 30, 2017, consolidated EBITDA for the combined pro forma entity is expected to be approximately $1.3 billion, including synergies. SS&C expects pro forma net leverage to be in the low 5x area at closing and will deleverage by approximately 0.7x per year.
Both SS&C’s and DST’s boards of directors have approved the transaction, and it is expected to close by the third quarter of this year. The transaction is subject to DST’s stockholder approval, clearances by the relevant regulatory authorities, and other customary closing conditions.
DST Systems, Inc. (NYSE: DST) is a provider of specialized technology, strategic advisory, and business operations outsourcing to the financial and healthcare industries.
SS&C is a global provider of investment and financial software-enabled services and software for the global financial services industry. Founded in 1986, SS&C is headquartered in Windsor, Connecticut and has offices around the world.