SS&C Technologies Holdings plans to acquire 100% of Mainstream Group Holding’s shares and outstanding equity. The company has entered into a conditional Scheme Implementation Deed that, if implemented, will result in it paying A$2 per security, conforming to the arrangement.
The total purchase implies an enterprise value of $225 million for Mainstream, including transaction costs and net debt. Standing in the way of SS&C (SSNC) completing the transaction are customary closing conditions that include Mainstream shareholders’ approval of the takeover.
The relevant Australian court will also have to sign off on the deal and certain regulatory approvals will need to be obtained. SS&C anticipates closing the deal in the third quarter. Once complete, Mainstream will join SS&C as a provider of investment administration middle office and share registry solutions. The company boasts a massive clientele base spanning Australia, Hong Kong, Singapore, Malta, the US, and the Cayman Islands.
Commenting on the proposed takeover, SS&C CEO Bill Stone said, “Mainstream Group’s fund and superannuation services complement SS&C’s extensive administration offerings in Australia and throughout the world and demonstrate great revenue growth potential.”
SS&C shares gained 18% in 2020. Year to date, the stock is up 0.8%. (See SSNC Technologies stock analysis on TipRanks).
In February, Raymond Jame’s analyst Patrick O’Shaughnessy reiterated a Buy rating on the stock, with a $63 price target implying 13% downside potential to current levels.
According to the analyst, SS&C is well supported by an active merger and acquisition strategy.
O’Shaughnessy stated, “The Company has been aggressive with M&A as a primary means of growing company revenue and earnings. We believe the company has the capability and desire to execute numerous tuck-in acquisitions on an annual basis as well as large.”
Overall, SS&C stock is currently rated as a Strong Buy on Wall Street based on 6 Buys and 1 Hold. An average analyst price target of $78.17 implies SSNC shares have approximately 6.5% upside potential to current levels.
According to the TipRanks Smart Score rating system, SSNC scores a low 3 out of 10, signaling that it could underperform the market.
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