SunGard Being Acquired by Fidelity National Information Services (FIS)
In August 2015 it was announced that FIS will acquire long-time transfer agent service provider SunGard in a $9.1 billion cash and stock deal, before year-end, subject to regulatory approval which we expect will be quick. While this looks like the loss of yet another iconic, independent player in the steadily shrinking stock transfer industry, it is actually not – and is arguably a positive development – for several reasons:
- SunGard has provided the record keeping software that most big “in-house” stock transfer agents and many bank transfer agents use – Duke Energy and MGE Energy being examples of the former, Wells Fargo and Continental being examples of the latter – meaning while SunGard has been the largest industry participant of its kind, it has been more of a “back-office” provider than up-front, turn-key transfer agent like Computershare or American Stock Transfer. The position and ranking of the “Big Five” transfer agents that collectively handle 85% of listed public companies in the United States (American Stock Transfer, Broadridge, Computershare, Continental and Wells Fargo) are thus not affected by this merger.
- SunGard’s services are not “going away.” They are becoming housed within a global leader in banking services/payment processing where, given the similarity of the two companies’ functions, they can be fully appreciated – and enhanced. Indeed, the combined company will have no less than 55,000 employees located in 130 countries around the world, with annual revenue of over $9.2 billion.
- Given the marked decline during the past two decades in number of in-house transfer agents, and transfer agents generally – plus the related loss of registered shareholders to record keep – SunGard was considered an industry casualty waiting to happen. Therefore, the merger effectively prevents an unpleasant ending for the company.
- The new lease on life for SunGard will allow it to complete beta testing on its new “Stream” software for in-house providers, allowing a full and successful roll-out to its users in 2016.
So we applaud this union, and wish the “New FIS” – with its many critical industry clients – all the best in the future.