June 19, 2021 FAT-AUS-1019

Raising the stakes

Another week, another upwardly revised takeover bid for Mainstream. A week after global fund administrator Apex lifted its bid to $2.55 a share in cash, previous bidder SS&C Technologies exercised its matching right, and increased its offer, albeit very slightly, to $2.56 a share.

The dust had barely settled on the latest revised bid when Apex came straight back, offering $2.60 per share. Management at Mainstream have confirmed Apex as providing the superior proposal, and it is now the incumbent offer, SS&C now has till this Friday to match or offer more favourable terms than currently tabled by Apex.

Mainstream would be good fit for Apex which is Bermuda headquartered, with over $1 trillion in assets. Apex has a strong presence in Australia, having operated an investor service offering here for over a decade. The acquisition of Mainstream would be highly complementary, and boost scale from a local perspective.

But SS&C is no minnow either, with the Connecticut headquartered firm being a global provider of wealth management and fund services to more than 18,000 organisations.

SS&C clients include Australian superannuation funds, and a deal would have some fantastic synergies, and accelerate the company’s growth ambitions in Australia.  The fact that the majority of Mainstream’s business run on SS&C technology means it would be highly complementary. SS&C management will be well aware of the strong operational progress being made by Mainstream, particularly in the US, and will no doubt be eager to bring the group into the fold. SS&C has been on the acquisitions trail, and this would add to a series of material transactions made in recent times,

We believe there is a reasonable chance that SS&C will improve their offer before the end of the week.

After a ‘knockout’ bid from SS&C effectively blew the initial approach from Vistra out of the water, it now all feels t’s a bit like a house auction where the bidding slows down and goes up in small incremental increases.

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