FIDELITY NATIONAL INFORMATION SERVICES, INC.
As filed
with the Securities and Exchange Commission on June 16,
2009
Registration
No. 333-158960
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-4
REGISTRATION
STATEMENT
Under
The Securities Act of
1933
FIDELITY NATIONAL INFORMATION
SERVICES, INC.
(Exact Name of Registrant as
Specified in its Charter)
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Georgia
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7389
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37-1490331
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(State or other
jurisdiction of incorporation)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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601 Riverside Avenue
Jacksonville, Florida 32204
(904) 854-5000
(Address, including Zip Code,
and Telephone Number, including Area Code, of Registrants
Principal Executive Offices)
Ronald D. Cook
Executive Vice President, General Counsel and Corporate
Secretary
601 Riverside Avenue
Jacksonville, Florida 32204
(904) 854-5000
(Name, Address, including Zip
Code, and Telephone Number, including Area Code, of Agent for
Service)
With copies to:
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Donald W. Layden, Jr., Esq.
Senior Executive Vice President, General
Counsel and Corporate Secretary
Metavante Technologies, Inc.
4900 West Brown Deer Road
Milwaukee, Wisconsin 53223
(414) 357-2290
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Lawrence S. Makow, Esq.
Matthew M. Guest, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
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Jeffrey Symons, Esq.
Yi Claire Sheng, Esq.
Kirkland & Ellis LLP
153 East 53rd Street
New York, New York 10022
(212) 446-4800
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Approximate date of commencement of the proposed sale of the
securities to the public: As soon as practicable
after this Registration Statement becomes effective and upon
completion of the merger described in the enclosed document.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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(Do not check if a smaller reporting company)
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The Registrant hereby amends
this Registration Statement on such date or dates as may be
necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933,
as amended, or until the Registration Statement shall become
effective on such dates as the Commission, acting pursuant to
said Section 8(a), may determine.
The
information in this document is not complete and may be changed.
We may not sell the securities offered by this document until
the registration statement filed with the Securities and
Exchange Commission is effective. This document does not
constitute an offer to sell or a solicitation of an offer to buy
any securities in any jurisdiction where an offer or
solicitation is not permitted.
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PRELIMINARY
SUBJECT TO COMPLETION DATED JUNE 16,
2009
MERGER
PROPOSED YOUR VOTE IS VERY IMPORTANT
The board of directors of Fidelity National Information
Services, Inc., or FIS, and the board of directors of Metavante
Technologies, Inc., or Metavante, have each approved a merger
agreement which provides for the acquisition of Metavante by
FIS. Following completion of the merger, Metavante will be
wholly owned by FIS.
If the merger is completed, each share of Metavante common stock
outstanding immediately before that time will automatically be
converted into the right to receive 1.35 shares of FIS
common stock. This exchange ratio is fixed and will not be
adjusted. Based on the closing price of FIS common stock on the
New York Stock Exchange on March 31, 2009, the last trading
day before public announcement of the merger, the 1.35 exchange
ratio represented $24.57 in value for each share of Metavante
common stock. Based on the closing price of FIS common stock on
the New York Stock Exchange on
[ ],
2009, the latest practicable date before the date of this
document, the exchange ratio represented
$[ ] in value for each share of
Metavante common stock. Shares of FIS common stock outstanding
before the merger is completed will remain outstanding and will
not be exchanged, converted or otherwise changed in the merger.
In connection with the proposed merger, FIS has entered into an
equity capital investment agreement with affiliates of Thomas H.
Lee Partners, L.P., or THL, and Fidelity National Financial,
Inc., or FNF. We also refer to THL and FNF as the equity capital
investors. Under the investment agreement, FIS, THL and FNF have
agreed that, in connection with completion of the merger, FIS
will issue approximately 16.1 million shares of FIS common
stock in the aggregate to THL and to FNF in exchange for the
payment to FIS of approximately $250 million in cash. The
completion of these transactions is subject to the prior
approval of the FIS shareholders, the completion of the merger
and the other terms and conditions contained in the investment
agreement.
The merger is intended to qualify as a
reorganization under United States federal tax law.
Accordingly, Metavante shareholders generally are not expected
to recognize any gain or loss for United States federal income
tax purposes on the exchange of shares of Metavante common stock
for shares of FIS common stock in the merger, except with
respect to any cash received instead of fractional shares of FIS
common stock.
At a special meeting of FIS shareholders, FIS shareholders will
be asked to vote on the issuance of FIS common stock to
Metavante shareholders in the merger and on the issuance of FIS
common stock to each of THL and FNF under the investment
agreement. Approval of each proposal requires the affirmative
vote of a majority of votes cast by the holders of FIS common
stock, provided that the total votes cast represent a majority
of the votes entitled to be cast on the proposal.
At a special meeting of Metavante shareholders, Metavante
shareholders will be asked to vote on the approval and adoption
of the merger agreement and the transactions it contemplates.
Approval and adoption of the merger agreement and the
transactions it contemplates requires the affirmative vote of a
majority of all the votes entitled to be cast by the holders of
Metavante common stock. WPM, L.P., or WPM, an affiliate of
Warburg Pincus LLC, has entered into an agreement with FIS, Cars
Holdings, LLC and Metavante under which, subject to the terms
and conditions of that agreement, WPM has agreed to vote all of
the Metavante shares it holds in favor of the merger. As of the
date of this document, WPM holds in the aggregate approximately
25% of the outstanding shares of Metavante common stock.
The FIS board of directors unanimously recommends that the
FIS shareholders vote FOR the proposal to issue
shares of FIS common stock in the merger and FOR the
proposals to issue shares of FIS common stock to the equity
capital investors.
The Metavante board of directors unanimously recommends that
the Metavante shareholders vote FOR the proposal to
approve and adopt the merger agreement and the transactions it
contemplates.
The obligations of FIS and Metavante to complete the merger are
subject to the satisfaction or waiver of conditions set forth in
the merger agreement. More information about FIS, Metavante and
the merger, as well as the equity capital investment, is
contained in this joint proxy statement/prospectus. FIS and
Metavante encourage you to read this entire joint proxy
statement/prospectus carefully, including the section entitled
Risk Factors beginning on
page [ ].
We look forward to the successful combination of FIS and
Metavante.
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Lee A. Kennedy
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Frank R. Martire
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President and Chief Executive Officer
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Chairman and Chief Executive Officer
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Fidelity National Information Services, Inc.
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Metavante Technologies, Inc.
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Neither the Securities and Exchange Commission, also referred to
in this document as the SEC, nor any state securities commission
has approved or disapproved of the securities to be issued under
this document or determined that this document is accurate or
complete. Any representation to the contrary is a criminal
offense.
This document is dated
[ ],
2009 and is first being mailed to the shareholders of FIS and
Metavante on or about
[ ],
2009.
Fidelity
National Information Services, Inc.
601 Riverside Avenue
Jacksonville, Florida 32204
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Fidelity National Information Services,
Inc.:
Notice is hereby given that a Special Meeting of Shareholders of
Fidelity National Information Services, Inc. will be held on
[ ],
2009 at [ ], at
[ ] to consider and vote upon the
following matters:
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a proposal to approve the issuance of shares of FIS common stock
as contemplated by the Agreement and Plan of Merger, dated as of
March 31, 2009, by and among Fidelity National Information
Services, Inc., Cars Holdings, LLC, and Metavante Technologies,
Inc., as such agreement may be amended from time to time;
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a proposal to approve the issuance of 12,861,736 shares of
FIS common stock to be purchased by affiliates of Thomas H. Lee
Partners, L.P. as contemplated by the Investment Agreement,
dated as of March 31, 2009, by and between FIS and the
investors named therein, as such agreement may be amended from
time to time;
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a proposal to approve the issuance of 3,215,434 shares of
FIS common stock to be purchased by Fidelity National Financial,
Inc. as contemplated by the Investment Agreement, dated as of
March 31, 2009, by and between FIS and the investors named
therein, as such agreement may be amended from time to
time; and
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a proposal to approve the adjournment of the special meeting,
including, if necessary or appropriate, to solicit additional
proxies in the event that there are not sufficient votes at the
time of the special meeting to approve any of the foregoing
proposals.
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The FIS board of directors has fixed the close of business on
[ ],
2009 as the record date for the FIS special meeting. Only FIS
shareholders of record at that time are entitled to notice of,
and to vote at, the FIS special meeting, or any adjournment or
postponement of the FIS special meeting. Approval of the
proposal to issue shares of FIS common stock in the merger and
the proposals to issue shares of FIS common stock to the equity
capital investors each requires the approval by the affirmative
vote of a majority of votes cast at the special meeting,
provided that the total votes cast represent a majority of the
votes entitled to be cast on the proposal.
Whether or not you plan to attend the special meeting, please
vote by one of the methods described below to ensure that your
shares are represented and voted in accordance with your wishes.
Please vote as soon as possible by accessing the Internet
site listed on the FIS proxy card, by calling the toll-free
number listed on the FIS proxy card, or by submitting your proxy
card by mail. To submit your proxy by mail, please complete,
sign, date and return the accompanying proxy card in the
enclosed self-addressed, stamped envelope. This will not prevent
you from voting in person, but it will help to secure a quorum
and avoid additional solicitation costs. Any holder of FIS
common stock who is present at the FIS special meeting may vote
in person instead of by proxy, thereby canceling any previous
proxy. In any event, a proxy may be revoked in writing or by
telephone or Internet at any time before the FIS special meeting
in the manner described in the accompanying document.
The FIS board of directors unanimously recommends that the
FIS shareholders vote FOR the proposal to issue
shares of FIS common stock in the merger and FOR the
proposals to issue shares of FIS common stock to the equity
capital investors.
By Order of the Board of Directors,
[ ]
Ronald D. Cook
Executive Vice President,
General Counsel and Corporate Secretary
[ ],
2009
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND
RETURN YOUR PROXY CARD, OR SUBMIT YOUR VOTE VIA THE TELEPHONE OR
INTERNET, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING.
Metavante
Technologies, Inc.
4900 West Brown Deer Road
Milwaukee, Wisconsin 53223
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Metavante Technologies, Inc:
Notice is hereby given that a Special Meeting of Shareholders of
Metavante Technologies, Inc. will be held on
[ ],
2009 at
[ ],
Central Time, at
[ ]
to consider and vote upon the following matters:
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a proposal to approve and adopt the Agreement and Plan of
Merger, dated as of March 31, 2009, by and among Fidelity
National Information Services, Inc., Cars Holdings, LLC, and
Metavante Technologies, Inc., as such agreement may be amended
from time to time, and the transactions it contemplates; and
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a proposal to approve the adjournment of the special meeting,
including, if necessary or appropriate, to solicit additional
proxies in the event that there are not sufficient votes at the
time of the special meeting to approve the foregoing proposal.
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The Metavante board of directors has fixed the close of business
on
[ ],
2009 as the record date for the Metavante special meeting. Only
Metavante shareholders of record at that time are entitled to
notice of, and to vote at, the Metavante special meeting, or any
adjournment or postponement of the Metavante special meeting.
Approval and adoption of the merger agreement and the
transactions it contemplates requires the affirmative vote of a
majority of all the votes entitled to be cast by the holders of
Metavante common stock.
WPM, an affiliate of Warburg Pincus LLC, has entered into an
agreement with FIS, Cars Holdings, LLC and Metavante under
which, subject to the terms and conditions of that agreement, it
has agreed to vote all of the Metavante shares it holds in favor
of the merger. As of the date of this document, WPM holds in the
aggregate approximately 25% of the outstanding shares of
Metavante common stock.
Whether or not you plan to attend the special meeting, please
vote by one of the methods described below to ensure that your
shares are represented and voted in accordance with your
wishes. Please vote as soon as possible by accessing the
Internet site listed on the Metavante proxy card, by calling the
toll-free number listed on the Metavante proxy card, or by
submitting your proxy card by mail. To submit your proxy by
mail, please complete, sign, date and return the accompanying
proxy card in the enclosed self-addressed, stamped envelope.
This will not prevent you from voting in person, but it will
help to secure a quorum and avoid added solicitation costs. Any
holder of Metavante common stock who is present at the Metavante
special meeting may vote in person instead of by proxy, thereby
canceling any previous proxy. In any event, a proxy may be
revoked in writing or by telephone or Internet at any time
before the Metavante special meeting in the manner described in
the accompanying document.
The Metavante board of directors unanimously recommends that
the Metavante shareholders vote FOR the proposal to
approve and adopt the merger agreement and the transactions it
contemplates.
By Order of the Board of Directors,
[ ]
Donald W. Layden, Jr.
Senior Executive Vice President,
General Counsel and Secretary
[ ],
2009
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND
RETURN YOUR PROXY CARD, OR SUBMIT YOUR VOTE VIA THE TELEPHONE OR
INTERNET, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL
MEETING.
ADDITIONAL
INFORMATION
This document incorporates important business and financial
information about FIS and Metavante from documents that are not
included in or delivered with this document. You can obtain
documents incorporated by reference in this document, other than
certain exhibits to those documents, free of charge through the
Securities and Exchange Commissions website
(www.sec.gov) or by requesting them in writing or by
telephone from the appropriate company at the following
addresses:
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Fidelity National Information Services, Inc.
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Metavante Technologies, Inc.
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601 Riverside Avenue
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4900 West Brown Deer Road
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Jacksonville, Florida 32204
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Milwaukee, Wisconsin 53223
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(904)
854-3282
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(414) 357-2290
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Attn: Investor Relations
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Attn: Investor Relations
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If you would like to request any documents, please do so by
[ ],
2009 in order to receive them before the FIS special meeting and
by
[ ],
2009 in order to receive them before the Metavante special
meeting.
For more information, see Where You Can Find More
Information beginning on page [ ].
You should rely only on the information contained in or
incorporated by reference into this document. No one has been
authorized to provide you with information that is different
from that contained in, or incorporated by reference into, this
document. This document is dated
[ ],
2009. You should not assume that the information contained in,
or incorporated by reference into, this document is accurate as
of any date other than that date. Neither our mailing of this
document to FIS shareholders or Metavante shareholders nor the
issuance by FIS of common stock in connection with the merger
will create any implication to the contrary.
Information on the websites of FIS or Metavante, or any
subsidiary of FIS or Metavante, is not part of this document.
You should not rely on that information in deciding how to vote.
This document does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any
person to whom it is unlawful to make any such offer or
solicitation in such jurisdiction. Information contained in this
document regarding FIS has been provided by FIS and information
contained in this document regarding Metavante has been provided
by Metavante.
TABLE OF
CONTENTS
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112
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APPENDICES
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APPENDIX A
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Agreement and Plan of Merger, dated as of March 31, 2009,
by and among Fidelity National Information Services, Inc., Cars
Holdings, LLC and Metavante Technologies, Inc.
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A-1
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APPENDIX B
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Investment Agreement, dated as of March 31, 2009, by and
between Fidelity National Information Services, Inc. and the
Investors
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B-1
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APPENDIX C
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Opinion of Goldman, Sachs & Co.
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C-1
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APPENDIX D
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Opinion of Banc of America Securities LLC
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D-1
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APPENDIX E
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Opinion of Barclays Capital Inc.
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E-1
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QUESTIONS
AND ANSWERS
The following are some questions that you, as a shareholder
of FIS or Metavante, may have regarding the shareholders
meetings and the answers to those questions. FIS and Metavante
urge you to read the remainder of this document carefully
because the information in this section does not provide all the
information that might be important to you in determining how to
vote. Additional important information is also contained in the
appendices to, and the documents incorporated by reference into,
this document.
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Why am I receiving this document? |
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You are receiving this document because you were a shareholder
of record of FIS or Metavante on the record date for the
applicable FIS or Metavante special meeting. FIS and Metavante
have agreed to the acquisition of Metavante by FIS under the
terms of a merger agreement that is described in this document.
A copy of the merger agreement is attached to this document as
Appendix A. In order to complete the merger, FIS
shareholders and Metavante shareholders must vote to approve the
following proposals: |
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FIS shareholders must approve the issuance of shares
of FIS common stock in the merger.
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Metavante shareholders must approve and adopt the
merger agreement and the transactions it contemplates.
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FIS and Metavante will hold separate shareholders meetings
to obtain these approvals. FIS shareholders will also consider
and vote on proposals to issue shares of FIS common stock to be
purchased by the equity capital investors as more fully
described below under FIS Proposals 2 and 3: The
Investments. A copy of the investment agreement is
attached to this document as Appendix B. |
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This document contains important information about the merger,
the equity capital investment and the meetings of the respective
shareholders of FIS and Metavante, and you should read it
carefully. The enclosed proxy card and instructions allow you to
vote your shares without attending your respective
shareholders meeting in person. |
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Your vote is important. We encourage you to vote as soon as
possible. |
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The FIS board of directors unanimously recommends that the
FIS shareholders vote FOR the proposal to issue
shares of FIS common stock in the merger and FOR the
proposals to issue shares of FIS common stock to the equity
capital investors. |
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The Metavante board of directors unanimously recommends that
the Metavante shareholders vote FOR the proposal to
approve and adopt the merger agreement and the transactions it
contemplates. |
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When and where will the shareholders meetings be
held? |
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A: |
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The FIS special meeting will be held at
[ ]
on
[ ],
2009 at
[ ],
local time. |
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The Metavante special meeting will be held at
[ ],
on
[ ],
2009 at
[ ],
local time. |
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How do I vote? |
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If you are a shareholder of record of FIS as of the record date
for the FIS special meeting or a shareholder of record of
Metavante as of the record date for the Metavante special
meeting, you may vote in person by attending your
shareholders meeting or, to ensure your shares are
represented at the meeting, you may vote by: |
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accessing the Internet website specified on your
proxy card;
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calling the toll-free number specified on your proxy
card; or
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signing and returning the enclosed proxy card in the
postage-paid envelope provided.
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If you hold FIS shares or Metavante shares in the name of a bank
or broker, please see the discussion below. |
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If my shares are held in street name by my broker, will my
broker vote my shares for me? |
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A: |
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If you hold your shares in a stock brokerage account or if your
shares are held by a bank or nominee (that is, in street name),
you must provide the record holder of your shares with
instructions on how to vote your shares. Please follow the
voting instructions provided by your bank or broker. Please note
that you may not vote shares held in street name by returning a
proxy card directly to FIS or Metavante or by voting in person
at your shareholders meeting unless you provide a
legal proxy, which you must obtain from your bank or
broker. Further, brokers who hold shares of FIS or Metavante
common stock on behalf of their customers may not give a proxy
to FIS or Metavante to vote those shares on the Metavante merger
proposal or the FIS share issuance proposals unless they have
received voting instructions from their customers. |
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If you are a Metavante shareholder that holds shares in street
name and you do not instruct your broker on how to vote your
shares, your broker may not vote your shares, which will have
the same effect as a vote against the proposal to approve and
adopt the merger agreement and the transactions it contemplates. |
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Q: |
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What will happen if I fail to vote or I abstain from
voting? |
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A: |
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If you are a FIS shareholder and fail to vote, or abstain, it
will count against obtaining a quorum for the proposal to
approve the issuance of shares of FIS common stock in the merger
and the proposals to issue shares of FIS common stock to the
equity capital investors, which requires that the total votes
cast represent a majority of the votes entitled to be cast on
the proposal. If a quorum is present, the failure to vote or
abstention will not count as a vote against the proposal to
approve the issuance of shares of FIS common stock in the merger
or the proposals to issue shares of FIS common stock to the
equity capital investors. |
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If you are a Metavante shareholder and fail to vote, or abstain,
it will have the same effect as a vote against the proposal to
approve and adopt the merger agreement and the transactions it
contemplates. |
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Q: |
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What will happen if I return my proxy card without indicating
how to vote? |
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A: |
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If you return your signed proxy card without indicating how to
vote on any particular proposal, the FIS or Metavante common
stock represented by your proxy will be voted in accordance with
managements recommendation on that proposal. |
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Can I change my vote after I have returned a proxy or voting
instruction card? |
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Yes. You can change your vote at any time before your proxy is
voted at your respective shareholders meeting. You can do
this in one of three ways: |
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you can send a signed notice of revocation;
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you can grant a new, valid proxy by proxy card,
Internet or telephone, with a later date; or
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if you are a holder of record, you can attend your
shareholders meeting and vote in person, which will
automatically cancel any proxy previously given, or you may
revoke your proxy in person, but your attendance alone will not
revoke any proxy that you have previously given.
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If you choose either of the first two methods, you must submit
your notice of revocation or your new signed proxy to the
Corporate Secretary of FIS or Metavante, as appropriate, to be
received no later than the beginning of the applicable
shareholders meeting. If your shares are held in street
name by your bank or broker, you should contact your broker to
change your vote. |
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What do I need to do now? |
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Carefully read and consider the information contained in and
incorporated by reference into this document, including its
appendices. |
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In order for your shares to be represented at your
shareholders meeting: |
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you can attend your shareholders meeting in
person;
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you can vote through the Internet or by telephone by
following the instructions included on your proxy card; or
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you can indicate on the enclosed proxy card how you
would like to vote and return the signed proxy card in the
accompanying pre-addressed postage paid envelope.
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Do I have dissenters rights or appraisal rights? |
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No. Under Georgia law, holders of FIS common stock are not
entitled to appraisal rights in connection with the share
issuance proposal. Under Wisconsin law, the holders of Metavante
common stock are not entitled to appraisal rights in connection
with the merger. |
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Is the merger expected to be taxable to Metavante
shareholders or to FIS and/or Metavante? |
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Generally, no. The merger is intended to qualify as a
reorganization within the meaning of
Section 368(a) of the United States Internal Revenue Code
of 1986, as amended, which we refer to as the Code, and holders
of Metavante common stock generally are not expected to
recognize any gain or loss for United States federal income tax
purposes on the exchange of shares of Metavante common stock for
shares of FIS common stock in the merger, except with respect to
cash received instead of fractional shares of FIS common stock.
In addition, none of FIS, Metavante or Merger Sub will recognize
any gain or loss for United States federal income tax purposes
as a result of the merger. You should read Material United
States Federal Income Tax Consequences of the Merger
beginning on page [ ] for a more complete discussion
of the United States federal income tax consequences of the
merger. Tax matters can be complicated and the tax consequences
of the merger to you will depend on your particular tax
situation. We urge you to consult your tax advisor to
determine the tax consequences of the merger to you. |
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Should I send in my Metavante stock certificates now? |
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No. Metavante shareholders should not send in any stock
certificates now. After the merger is completed, FIS
exchange agent will send former Metavante shareholders a letter
of transmittal explaining what they must do to exchange their
Metavante stock certificates for the merger consideration
payable to them. The shares of FIS common stock that Metavante
shareholders receive in the merger will be issued in book-entry
form. |
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If you are a FIS shareholder, you are not required to take any
action with respect to your FIS stock certificates. |
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Who can help answer my questions? |
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FIS or Metavante shareholders who have questions about the
merger or the other matters to be voted on at the
shareholders meetings or who desire additional copies of
this document or additional proxy cards should contact: |
Georgeson
199 Water Street, 26th Floor
New York, NY 10038
Banks and brokers call
(212) 440-9800
FIS shareholders call toll-free (800) 891-3214
Metavante shareholders call toll-free (866) 257-5565
iii
SUMMARY
This summary highlights information contained elsewhere in
this document. It may not contain all of the information that is
important to you. We urge you to carefully read the entire
document and the other documents to which we refer in order to
fully understand the merger and the related transactions. See
Where You Can Find More Information on page
[ ]. Each item in this summary refers to the page of
this document on which that subject is discussed in more
detail.
The
Merger (See page [ ])
A copy of the merger agreement is attached as Appendix A to
this document. FIS and Metavante encourage you to read the
entire merger agreement carefully because it is the principal
document governing the merger.
Structure
of the Merger (See page [ ])
Subject to the terms and conditions of the merger agreement and
in accordance with Wisconsin law and Delaware law, at the
effective time of the merger, Metavante will be merged with and
into Cars Holdings, LLC, a direct, wholly owned subsidiary of
FIS formed for the purposes of the merger (referred to in this
document as Merger Sub), with Merger Sub surviving the merger
and remaining a wholly owned subsidiary of FIS. The effect of
the merger will be that Metavante will be acquired by FIS and
shares of Metavante common stock will no longer be publicly
traded.
Consideration
to be Received in the Merger (See page [ ])
Upon completion of the merger, each share of Metavante common
stock outstanding immediately prior to completion of the merger
will automatically be converted into the right to receive
1.35 shares of FIS common stock. The 1.35 exchange ratio is
fixed and will not be adjusted based on changes following the
date of the merger agreement in the market value of the common
stock of Metavante or FIS or based on other changes. Because of
this, the implied dollar value of the consideration to Metavante
shareholders will fluctuate with changes in the market price of
a share of FIS common stock. Based on the closing price of FIS
common stock on the New York Stock Exchange on March 31,
2009, the last trading day before public announcement of the
merger, the 1.35 exchange ratio represented $24.57 in value for
each share of Metavante common stock. Based on the closing price
of FIS common stock on the New York Stock Exchange on
[ ],
2009, the latest practicable date before the date of this
document, the exchange ratio represented
$[ ] in value for each share of
Metavante common stock. FIS will not issue any fractional shares
of FIS common stock in the merger. Holders of Metavante common
stock who would otherwise be entitled to a fractional share of
FIS common stock will instead receive an amount in cash
calculated by multiplying the fraction of a share by the average
closing sale prices of FIS common stock on the New York Stock
Exchange for the five full trading days preceding (but not
including) the effective date of the merger. Shares of FIS
common stock outstanding before the merger is completed will
remain outstanding and will not be exchanged, converted or
otherwise changed in the merger.
Treatment
of Metavante Stock Awards (See
page [ ])
The merger agreement specifies how equity compensation awards
issued by Metavante prior to completion of the merger will be
treated in the merger. Upon completion of the merger:
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each outstanding option issued by Metavante to acquire Metavante
common stock will be converted into an option to purchase a
number of shares of FIS common stock equal to the number of
shares of Metavante common stock underlying such option
immediately prior to the merger multiplied by the exchange
ratio, with an exercise price that equals the exercise price of
such option immediately prior to the merger divided by the
exchange ratio;
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each restricted share of Metavante common stock will be
converted into a number of restricted shares of FIS common stock
equal to the number of shares of Metavante common stock
underlying such restricted share multiplied by the exchange
ratio;
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each performance share denominated in shares of Metavante common
stock will be converted into a number of restricted shares of
FIS common stock equal to the number of shares of Metavante
common stock underlying such performance share, at target, as of
immediately prior to the merger multiplied by a fraction, the
numerator of which is the number of whole calendar months
remaining in the performance period and the denominator of which
is the total number of calendar months in the performance
period, multiplied by the exchange ratio, and a cash amount
based upon the portion of the performance period that has been
completed; and
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each stock unit denominated in shares of Metavante common stock
will be converted into a number of shares of FIS common stock
equal to the number of shares of Metavante common stock
underlying such unit immediately prior to the merger multiplied
by the exchange ratio.
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FIS has generally agreed to assume at completion of the merger
Metavantes obligations with respect to the Metavante stock
options, restricted shares, performance shares and stock units
that are converted into FIS stock options and restricted shares
as described above in accordance with the terms of the plans and
agreements under which they have been granted.
Material
United States Federal Income Tax Consequences of the Merger (See
page [ ])
The merger is intended to qualify as a
reorganization within the meaning of
Section 368(a) of the Code, and it is a condition to the
parties respective obligations to complete the merger that
each of FIS and Metavante receive a tax opinion to that effect.
Accordingly, if you are a holder of Metavante common stock, the
merger generally will be tax-free to you for United States
federal income tax purposes as to the shares of FIS common stock
that you receive in exchange for your shares of Metavante common
stock in the merger, except for any gain or loss that may result
from the receipt of cash instead of fractional shares of FIS
common stock that you would otherwise be entitled to receive. In
addition, none of FIS, Metavante or Merger Sub will recognize
any gain or loss for United States federal income tax purposes
as a result of the merger.
The United States federal income tax consequences described
above may not apply to all holders of Metavante common stock.
Your tax consequences will depend on your individual situation.
Accordingly, we strongly urge you to consult your tax advisor
for a full understanding of the particular tax consequences of
the merger to you.
Opinions
of Financial Advisors
FIS
(See page [ ])
Goldman Sachs. Goldman, Sachs & Co.
delivered its opinion to the FIS board of directors that, as of
the date of the written fairness opinion, and based upon and
subject to the factors and assumptions set forth therein, the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock
pursuant to the merger agreement was fair from a financial point
of view to FIS. The full text of the written opinion of Goldman
Sachs, dated March 31, 2009, which sets forth assumptions
made, procedures followed, matters considered and limitations on
the review undertaken in connection with the opinion, is
attached as Appendix C. Goldman Sachs provided its opinion
for the information and assistance of the FIS board of directors
in connection with its consideration of the merger. The Goldman
Sachs opinion is not a recommendation as to how any holder of
shares of FIS common stock should vote with respect to the
merger or any other matter.
Banc of America Securities. In connection with
the merger, Banc of America Securities LLC, FIS financial
advisor, delivered to the FIS board of directors a written
opinion, dated March 31, 2009, as to the fairness, from a
financial point of view and as of the date of the opinion, of
the exchange ratio of 1.350 shares of FIS common stock to
be issued in exchange for each share of Metavante common stock
as provided for in the merger. The full text of the written
opinion, dated March 31, 2009, of Banc of America
Securities, which
2
describes, among other things, the assumptions made, procedures
followed, factors considered and limitations on the review
undertaken, is attached as Appendix D to this document and
is incorporated by reference herein in its entirety. Banc of
America Securities provided its opinion to the FIS board of
directors for the benefit and use of FIS board of
directors in connection with its evaluation of the merger. Banc
of America Securities opinion addresses only the fairness
to FIS of the exchange ratio of 1.350 shares of FIS common stock
to be issued in exchange for each share of Metavante common
stock pursuant to the merger agreement from a financial point of
view and does not constitute a recommendation to any shareholder
as to how to vote or act in connection with the proposed merger.
Metavante
(See page [ ])
On March 31, 2009, Barclays Capital Inc., or Barclays
Capital, provided its opinion to Metavantes board of
directors that, as of such date and based upon and subject to
the qualifications, limitations and assumptions stated in its
opinion, from a financial point of view, the exchange ratio to
be offered to the shareholders of Metavante in the merger was
fair to such shareholders.
The full text of Barclays Capitals written opinion, dated
as of March 31, 2009, which sets forth, among other things,
the assumptions made, procedures followed, factors considered
and limitations upon the review undertaken by Barclays Capital
in rendering its opinion, is attached to this document as
Appendix E. Holders of shares of Metavante common stock are
encouraged to read the opinion carefully in its entirety.
Barclays Capital provided its opinion for the use and benefit of
Metavantes board of directors in connection with its
consideration of the merger. Barclays Capitals opinion
addresses only the fairness, from a financial point of view, of
the exchange ratio to be offered to the shareholders of
Metavante in the merger and does not constitute a recommendation
to any shareholder of Metavante as to how such shareholder
should vote with respect to the proposed transaction or any
other matter.
Interests
of Certain Persons in the Merger (See
page [ ])
Metavantes executive officers and directors have interests
in the merger as individuals that are different from, or in
addition to, the interests of Metavantes shareholders
generally. The Metavante board of directors was aware of these
interests and considered them, among other matters, in approving
and adopting the merger agreement and the transactions it
contemplates. Messrs. David Coulter, James Neary and Adarsh
Sarma, who are currently members of the Metavante board of
directors, are also managing directors of Warburg Pincus LLC. As
discussed below under the caption The Merger
Agreement Agreements with an Entity Affiliated with
Warburg Pincus LLC, WPM, which is affiliated with Warburg
Pincus LLC, has entered into certain agreements with FIS, Merger
Sub and Metavante in connection with the execution of the merger
agreement. Stock options, restricted stock, performance shares
and stock units in respect of Metavante stock will generally be
assumed by FIS and converted into awards denominated in FIS
common stock, as adjusted for the exchange ratio in the merger.
Certain executive officers have change of control agreements
with Metavante that provide them with severance and other
benefits in connection with a qualifying termination of
employment following a change of control such as the merger.
Mr. Frank R. Martire, the current Chairman and Chief
Executive Officer of Metavante, and Mr. Michael D. Hayford,
the current President and Chief Operating Officer of Metavante,
have each entered into an employment agreement and relocation
letter agreement with FIS in connection with the entry into the
merger agreement. Each employment agreement and relocation
letter agreement is effective upon, and subject to, the closing
of the merger and will amend, restate and supersede the
executives existing employment and change of control
agreement with Metavante. Upon completion of the merger,
Mr. Martire will become one of the nine members of the
board of directors of FIS. See FIS Proposal 1 and
Metavante Proposal 1: The Merger Board of
Directors and Management of FIS following Completion of the
Merger. Metavantes executive officers and directors
also have rights to indemnification and directors and
officers liability insurance that will survive completion
of the merger.
3
Board of
Directors of FIS Following Completion of the Merger (See
page [ ])
Upon completion of the merger, the board of directors of FIS
will consist of nine members comprised of:
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Mr. William P. Foley, the current chairman of the board of
FIS, Mr. Lee Kennedy, the current President and Chief
Executive Officer of FIS, plus four current non-employee
directors of FIS designated by FIS (which will include the THL
designee in the event the THL investment is completed);
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Mr. Frank R. Martire, the current Chairman and Chief
Executive Officer of Metavante, plus one current non-employee
director of Metavante designated by Metavante; and
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one individual designated by WPM.
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Regulatory
Approvals Required for the Merger (See
page [ ])
We have agreed to use our reasonable best efforts to obtain all
regulatory approvals required to complete the transactions
contemplated by the merger agreement. These approvals include
the termination or expiration of the applicable waiting period
under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder, collectively referred to
in this document as the HSR Act. FIS and Metavante have
completed, or will complete, the filing of applications and
notifications to obtain the required regulatory approvals. On
April 17, 2009, FIS and Metavante each filed its
notification and report form under the HSR Act with the
Antitrust Division of the United States Department of Justice,
referred to in this document as the Antitrust Division, and the
United States Federal Trade Commission, referred to in this
document as the FTC. On May 18, 2009, FIS, with the
concurrence of Metavante, voluntarily withdrew its notification
and report form. FIS refiled the required notification and
report form on May 20, 2009, at which time a new initial
30-day waiting period commenced.
Although we do not know of any reason why we cannot obtain these
regulatory approvals in a timely manner, we cannot be certain
when or if we will obtain them.
Conditions
That Must Be Satisfied or Waived for the Merger to Occur (See
page [ ])
We currently expect to complete the merger in the third quarter
of 2009. However, as more fully described in this document and
in the merger agreement, whether or when the merger will be
completed depends on a number of conditions being satisfied or,
where legally permissible, waived. These conditions include,
among others:
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obtaining the approval of the issuance of FIS common stock in
the merger from the FIS shareholders and the approval of the
merger agreement and the transactions it contemplates from the
Metavante shareholders;
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the approval of FIS common stock to be issued in the
merger for listing on the New York Stock Exchange;
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obtaining required governmental and regulatory approvals;
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the absence of any legal prohibition on consummation of the
merger;
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that none of the required governmental and regulatory approvals
results in the imposition of conditions that would reasonably be
expected to have a material adverse effect (measured on a scale
relative to Metavante) on either party or the surviving company
of the merger;
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the receipt of tax opinions in form and substance reasonably
satisfactory to FIS and Metavante regarding the impact of the
merger on the tax treatment of Metavantes spin-off of
Marshall & Ilsley Corporation, or M&I, on
November 1, 2007 and FIS spin-off of Lender
Processing Services, Inc., or LPS, on July 2, 2008;
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the accuracy of the representations and warranties of the
parties to the merger agreement (subject to the materiality
standards set forth in the merger agreement);
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material performance of all the covenants of the parties to the
merger agreement; and
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the receipt of customary tax opinions as to the United States
federal income tax treatment of the merger.
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Several of the conditions to the obligations of the parties to
close are beyond our control and we cannot be certain when, or
if, the conditions to the merger will be satisfied or waived.
The obligations of FIS or Metavante to proceed with the merger
are not conditioned upon the completion of either of the
investments.
Termination
of the Merger Agreement (See page [ ])
We may agree to terminate the merger agreement without
completing the merger, even after shareholder approval, as long
as the termination is approved by each of our boards of
directors.
In addition, the merger agreement may be terminated by either
party in the following circumstances:
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if any of the required governmental and regulatory approvals are
denied (and the denial is final and nonappealable);
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if a governmental entity has issued a final and nonappealable
order permanently enjoining or prohibiting the merger;
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if the merger has not been completed on or before
December 31, 2009, unless the failure to complete the
merger by that date is due to a breach of the merger agreement
by the party seeking to terminate the agreement;
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if there is a breach by the other party that would cause the
closing conditions described above not to be satisfied, unless
the breach is capable of being, and is, cured within
30 days of notice of the breach;
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if the other party fails to recommend the approval of the
transaction to its shareholders, modifies its recommendation in
a manner adverse to the other party or recommends (or fails to
recommend against) an alternative transaction;
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if the other party fails to substantially comply with its
obligations relating to obtaining its shareholder vote or
relating to not soliciting alternative transactions;
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if either requisite shareholder approval is not obtained; or
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to enter into a definitive agreement with respect to a superior
proposal, if prior to obtaining its requisite shareholder
approval, a party (1) receives a superior proposal from a
third party that was not obtained in violation of such
partys obligation to refrain from soliciting alternative
transactions, (2) notifies the other party of its intention
to terminate the merger agreement and negotiates in good faith
with the other party (to the extent the other party desires to
negotiate) during a five day period to revise the terms of the
merger agreement so that the other proposal ceases to be a
superior proposal and (3) pays the termination fee.
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Expenses
and Termination Fees (See pages [ ] and
[ ])
Generally, all fees and expenses incurred in connection with the
merger agreement and the transactions contemplated by the merger
agreement will be paid by the party incurring those expenses,
subject to the specific exceptions discussed in this document.
Upon termination of the merger agreement under specified
circumstances, FIS or Metavante may be required to pay the other
party a termination fee of $175 million. See The
Merger Agreement Termination Fee beginning on
page [ ] for a complete discussion of the
circumstances under which a party may be required to pay a
termination fee.
The
Rights of Metavante Shareholders Will Be Governed by Georgia Law
and by the FIS Governing Documents after the Merger (See
page [ ])
The rights of Metavante shareholders will change as a result of
the merger due to differences in FIS and Metavantes
governing documents and due to the fact that the companies are
incorporated in different states (Metavante in Wisconsin and FIS
in Georgia). Metavante shareholders will become FIS shareholders
and their legal rights as shareholders will, following
completion of the merger, be governed by Georgia law, the FIS
amended and restated articles of incorporation and the FIS
amended and restated bylaws. This document contains a
description of the material differences in shareholder rights
beginning on page [ ].
5
No
Appraisal Rights (See page [ ])
Under Georgia law, holders of FIS common stock are not entitled
to appraisal rights in connection with the share issuances.
Under Wisconsin law, the holders of Metavante common stock are
not entitled to appraisal rights in connection with the merger.
Comparative
Market Prices and Share Information (See
page [ ])
FIS common stock is quoted on the New York Stock Exchange under
the symbol FIS. Metavante common stock is quoted on
the New York Stock Exchange under the symbol MV. The
following table shows the closing sale prices of FIS common
stock and Metavante common stock as reported on the New York
Stock Exchange on March 31, 2009, the last trading day
before we announced the merger, and on
[ ],
2009, the last practicable trading day before the distribution
of this document. This table also shows the implied value of the
merger consideration proposed for each share of Metavante common
stock, which we calculated by multiplying the closing price of
FIS common stock on those dates by 1.35, the exchange ratio.
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Implied Value of
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One Share of
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FIS Common
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Metavante
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Metavante
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Stock
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Common Stock
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Common Stock
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At March 31, 2009
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$
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18.20
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$
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19.96
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$
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24.57
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At
[ ],
2009
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$
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$
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$
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The market price of FIS common stock and Metavante common
stock will fluctuate prior to the special meetings and before
the merger is completed, which will affect the implied value of
the merger consideration to Metavante shareholders. You should
obtain current market quotations for the shares.
Agreements
with an Entity Affiliated with Warburg Pincus LLC (See
page [ ])
In connection with the merger agreement, on March 31, 2009,
WPM entered into a support agreement with FIS, Merger Sub and
Metavante under which, subject to the terms and conditions
thereof, WPM has agreed to vote all of the shares of Metavante
common stock it holds in favor of the merger and against any
proposal relating to alternative business combination
transactions involving Metavante. As of the date of this
document, WPM holds in the aggregate approximately 25% of the
outstanding shares of Metavante common stock. In connection with
the merger and based upon certain existing rights of WPM in
respect of its investment in Metavante, WPM and FIS also entered
into a shareholders agreement and a stock purchase right
agreement. Subject to the terms and conditions set forth in the
shareholders agreement, following completion of the merger, WPM
will be entitled to nominate and have appointed one director to
the board of directors of FIS and will be subject to certain
limitations on its ability to transfer its shares of FIS common
stock until 180 days after the closing date of the merger.
The stock purchase right agreement, which is similar to an
agreement WPM currently has with Metavante, provides WPM after
the merger with the right to purchase from FIS shares of FIS
common stock in accordance with formulas set forth in the stock
purchase right agreement if employee stock options that were
outstanding immediately prior to Metavantes spin-off of
M&I and which will be assumed by FIS in connection with the
merger are exercised following the merger. The stock purchase
right agreement with FIS would supersede WPMs similar
existing agreement with Metavante if and when the merger is
consummated. In connection with these transactions, Metavante
has agreed to reimburse WPMs reasonable
out-of-pocket
expenses incurred by WPM and its affiliates in connection with
the negotiation and completion of the transactions contemplated
by these agreements. The reimbursement of such expenses is
subject to a cap of $1.2 million in the aggregate.
Litigation
Related to the Merger (See page [ ])
Certain litigation is pending in connection with the merger. See
FIS Proposal 1 and Metavante Proposal 1: The
Merger Litigation Related to the Merger
beginning on page [ ].
The
Investments and the Investment Agreement
In connection with entering into the merger agreement, FIS has
entered into an investment agreement providing for an equity
capital investment in shares of FIS common stock by the equity
capital investors. The
6
FIS board of directors determined that the investments are in
the best interests of FIS and its shareholders after
considering, among other factors, the capital structure of FIS
following the completion of the proposed merger and the proposed
investments, and the significance of the proposed investments in
the context of the discussions with Metavantes lenders
regarding modifications to the terms of Metavantes
existing debt in connection with the proposed merger. See
FIS Proposal 1 and Metavante Proposal 1: The
Merger FIS Reasons for the Merger and the
Investments; Recommendation of the FIS Board of Directors
beginning on page [ ]. Under
the investment agreement, immediately after the merger,
(a) THL will purchase 12,861,736 shares of FIS common
stock for an aggregate purchase price of approximately
$200 million and (b) FNF will purchase
3,215,434 shares of FIS common stock for an aggregate
purchase price of approximately $50 million. The price per
share of FIS common stock under each of the THL and FNF
investments is $15.55. The price per share was determined
through arms-length negotiations with the equity capital
investors and was approved by the FIS board of directors on the
basis of the factors described under FIS Proposal 1
and Metavante Proposal 1: The Merger FIS
Reasons for the Merger and the Investments; Recommendation of
the FIS Board of Directors beginning on
page [ ].
The consummation of the investments is subject to the
satisfaction or waiver of certain conditions, including, among
others, approval by FIS shareholders of the issuance of shares
of FIS common stock to each of THL and FNF, the receipt of
required governmental approvals and expiration of applicable
waiting periods, the accuracy of the representations and
warranties of the other party (subject to a material adverse
effect standard), material compliance by the other party with
its obligations under the investment agreement, and the
consummation of the merger. While the obligations of FIS and the
equity capital investors to proceed with the investment are
conditioned upon the occurrence of the merger between FIS and
Metavante, the obligations of FIS or Metavante to proceed with
the merger are not conditioned upon the completion of either of
the investments.
Following the completion of the investments, pursuant to the
terms of the investment agreement and contingent upon THL
maintaining specified ownership levels in FIS common stock, THL
will have the right to designate one member to the FIS board of
directors. The investment agreement also provides that neither
THL nor FNF may transfer the shares purchased in the
investments, subject to limited exceptions, for 180 days
after the completion of the investments, and after such time
provides THL and FNF with certain rights to have the offering of
their shares of FIS common stock registered with the Securities
and Exchange Commission.
In consideration for entering into the investment agreement, FIS
has agreed to pay each of THL and FNF a transaction fee equal to
3% of their respective investments at the completion of the
investments.
A copy of the investment agreement is attached as
Appendix B to this document. We encourage you to read the
entire agreement carefully.
Interests
of Certain Persons in the Investments (see
page [ ])
Certain of FIS executive officers and directors have
interests in the transactions contemplated by the investment
agreement as a result of the existing relationships between each
of THL and FNF with FIS.
The
Shareholder Meetings
The FIS
Special Meeting (See page [ ])
The FIS special meeting will be held at
[ ],
on
[ ],
2009 at
[ ],
local time. At the FIS special meeting, FIS shareholders will be
asked to:
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approve the issuance of FIS common stock to Metavante
shareholders in the merger, as contemplated by the merger
agreement;
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approve the issuance of FIS common stock in connection with the
investment by THL, as contemplated by the investment agreement;
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7
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approve the issuance of FIS common stock in connection with the
investment by FNF, as contemplated by the investment
agreement; and
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consider and vote upon a proposal to approve the adjournment of
the special meeting, including, if necessary or appropriate, to
solicit additional proxies in the event that there are not
sufficient votes at the time of the special meeting to approve
any of the foregoing proposals.
|
The FIS board of directors has fixed the close of business on
[ ],
2009 as the record date for the FIS special meeting. Only FIS
shareholders of record at that time are entitled to notice of,
and to vote at, the FIS special meeting, or any adjournment or
postponement of the FIS special meeting. As of the record date,
there were
[ ]
shares of FIS common stock entitled to vote at the FIS special
meeting.
Each share of FIS common stock outstanding on the record date
entitles the holder to one vote on each matter to be voted upon
by shareholders at the special meeting. The proposal to approve
the issuance of shares of common stock in the merger and the
proposals to issue shares of FIS common stock to the equity
capital investors each requires the affirmative vote of a
majority of all votes cast by the holders of common stock at the
meeting. A FIS shareholders failure to vote, a broker
non-vote or an abstention will count against obtaining a quorum
for those proposals, which requires that the total votes cast
represent a majority of the votes entitled to be cast on such
proposal. If a quorum is present, a FIS shareholders
failure to vote, a broker non-vote or an abstention will not
count as a vote against the proposal to approve the issuance of
shares of FIS common stock in the merger or the proposals to
issue shares of FIS common stock to the equity capital investors.
As of the FIS record date, directors and executive officers of
FIS and their affiliates had the right to vote
[ ]
shares of FIS common stock, or approximately
[ ]% of the outstanding FIS common
stock entitled to be voted at the FIS special meeting.
The FIS board of directors believes that the merger is in the
best interests of FIS and its shareholders and has unanimously
approved and adopted the merger agreement and the transactions
it contemplates. The FIS board of directors also believe that
the equity capital investments are in the best interests of FIS
and its shareholders and has unanimously approved and adopted
the investment agreement and the transactions it contemplates.
For the factors considered by the FIS board of directors in
reaching its decision to approve the merger agreement and the
investment agreement and the transactions each agreement
contemplates, see FIS Proposal 1 and Metavante
Proposal 1: The Merger FIS Reasons for
the Merger and the Investments; Recommendation of the FIS Board
of Directors. The FIS board of directors unanimously
recommends that the FIS shareholders vote FOR the
proposal to issue shares of FIS common stock in the merger and
FOR the proposals to issue shares of FIS common
stock to the equity capital investors.
The
Metavante Special Meeting (See
page [ ])
The Metavante special meeting will be held at
[ ],
on
[ ],
2009 at
[ ],
local time. At the Metavante special meeting, Metavante
shareholders will be asked to:
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consider and vote upon the approval and adoption of the merger
agreement and the transactions it contemplates; and
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consider and vote upon a proposal to approve the adjournment of
the special meeting, including, if necessary or appropriate, to
solicit additional proxies in the event that there are not
sufficient votes at the time of the special meeting to approve
the foregoing proposal.
|
The Metavante board of directors has fixed the close of business
on
[ ],
2009 as the record date for the Metavante special meeting. Only
Metavante shareholders of record at that time are entitled to
notice of, and to vote at, the Metavante special meeting, or any
adjournment or postponement of the Metavante special meeting. As
of the record date, there were
[ ]
shares of Metavante common stock outstanding and entitled to
vote at the Metavante special meeting.
Each share of Metavante common stock outstanding on the record
date entitles the holder to one vote on each matter to be voted
upon by shareholders at the special meeting. Approval and
adoption of the merger
8
agreement and the transactions it contemplates requires the
affirmative vote of a majority of all the votes entitled to be
cast by the holders of Metavante common stock. Because the
affirmative vote of a majority of all the votes entitled to be
cast by the holders of Metavante common stock is needed for us
to proceed with the merger, the failure to vote by proxy or in
person will have the same effect as a vote against the merger.
Abstentions also will have the same effect as a vote against the
merger.
As of the Metavante record date, directors and executive
officers of Metavante and their affiliates had the right to vote
[ ]
shares of Metavante common stock, or approximately
[ ]% of the outstanding Metavante
common stock entitled to vote at the Metavante special meeting.
WPM has entered into an agreement with FIS, Merger Sub and
Metavante whereby, subject to the terms and conditions of that
agreement, it has agreed to vote all of the Metavante shares it
holds in favor of the merger. As of the date of this document,
WPM holds in the aggregate approximately 25% of the outstanding
shares of Metavante common stock.
The Metavante board of directors believes that the merger is in
the best interests of Metavante and its shareholders and has
unanimously approved and adopted the merger agreement and the
transactions it contemplates. For the factors considered by the
Metavante board of directors in reaching its decision to approve
the merger agreement and the transactions it contemplates, see
FIS Proposal 1 and Metavante Proposal 1: The
Merger Metavantes Reasons for the Merger;
Recommendation of the Metavante Board of Directors. The
Metavante board of directors unanimously recommends that the
Metavante shareholders vote FOR the proposal to
approve and adopt the merger agreement and the transactions it
contemplates.
The
Companies
Fidelity
National Information Services, Inc. (See
page [ ])
FIS is a leading provider of technology solutions, processing
services and information-based services to the financial
services industry. FIS offers a diversified service mix and
benefits from the opportunity to cross-sell multiple services
across its broad customer base. FIS is a member of the Standard
and Poors 500 Index. As of December 31, 2008, FIS had
over 14,000 customers in over 90 countries spanning all segments
of the financial services industry. These customers include 40
of the top 50 world banks, including nine of the top 10, as
ranked by Bankalmanac.com as of April 30, 2008, as well as
mid-tier and community banks, credit unions, commercial lenders,
automotive financial institutions, retailers and international
customers. The company is located on the web at
www.fidelityinfoservices.com. The principal executive
offices of FIS are located at 601 Riverside Avenue,
Jacksonville, Florida 32204, and its telephone number is
(904) 854-5000.
Additional information about FIS and its subsidiaries is
included in documents incorporated by reference in this
document. See Where You Can Find More Information on
page [ ].
Metavante
Technologies, Inc. (See page [ ])
Metavantes wholly owned operating subsidiary, Metavante
Corporation, delivers banking and payments technologies to
approximately 8,000 financial services firms and businesses
worldwide. Metavante products and services drive account
processing for deposit, loan and trust systems, image-based and
conventional check processing, electronic funds transfer,
consumer healthcare payments, electronic presentment and payment
transactions, outsourcing, and payment network solutions
including the
NYCE®
Payment Network, an ATM/PIN debit network. Metavante began
operations in 1964 as a wholly owned subsidiary of M&I
providing community and regional banks with dependable,
outsourced account processing services with a high level of
client service. Since then, Metavante has become a provider of
innovative, high quality products and services to the financial
services, commercial, and health care insurance industries. With
over 50 locations, Metavante recorded approximately
$1.7 billion in revenue for the year ended
December 31, 2008. The company is located on the web at
www.metavante.com. The principal executive offices of
Metavante are located at 4900 West Brown Deer Road,
Milwaukee, Wisconsin 53223, and its telephone number is
(414) 357-2290.
9
Additional information about Metavante and its subsidiaries is
included in documents incorporated by reference in this
document. See Where You Can Find More Information on
page [ ].
Cars
Holdings, LLC (See page [ ])
Cars Holdings, LLC, also referred to as Merger Sub, is a newly
formed Delaware limited liability company and a direct, wholly
owned subsidiary of FIS. The company was formed solely for the
purpose of effecting the proposed merger with Metavante and has
not carried on any activities other than in connection with the
proposed merger. Merger Subs address is 601 Riverside
Avenue, Jacksonville, Florida 32204, and its telephone number is
(904) 854-5000.
10
SELECTED
HISTORICAL FINANCIAL DATA OF FIS
Set forth below are highlights from FIS consolidated
financial data as of and for the years ended December 31,
2004 through 2008 and the three-month periods ended
March 31, 2009 and March 31, 2008. On February 1,
2006, FIS completed the merger of FIS and Certegy Inc. For
accounting and financial reporting purposes, the merger with
Certegy was treated as a reverse acquisition of Certegy by FIS
and purchase accounting was applied to the acquired assets and
liabilities of Certegy pursuant to generally accepted accounting
principles. Accordingly, FIS historical financial
information for periods prior to the merger with Certegy is the
historical financial information of FIS. On July 2, 2008,
FIS completed the spin-off of its former lender processing
services segment into a separate publicly traded company, Lender
Processing Services, Inc., or LPS. For accounting purposes the
results of LPS are presented as discontinued operations.
Accordingly, all prior periods have been restated to present the
results of FIS on a stand alone basis and include the results of
LPS up to July 1, 2008 as discontinued operations. You
should read this information in conjunction with FIS
consolidated financial statements and related notes included in
FIS Annual Report on
Form 10-K,
as amended by the Annual Report on Form 10-K/A, for the
year ended December 31, 2008 and FIS Quarterly Report
on Form 10-Q for the three-month period ended
March 31, 2009, which are incorporated by reference in this
document and from which this information is derived. See
Where You Can Find More Information on
page [ ].
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Three Months Ended
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March 31,
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Year Ended December 31,
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2009(1)(2)
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2008(1)(2)
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2008(1)(2)
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2007(1)(2)
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2006(2)
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2005
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2004
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(In millions, except per share data)
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Statement of Earnings Data:
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Processing and services revenues
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$
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797.8
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$
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830.3
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$
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3,446.0
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$
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2,921.0
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$
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2,416.5
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$
|
1,258.8
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$
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981.8
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Cost of revenues
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594.3
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648.7
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2,636.9
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2,265.8
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1,872.2
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939.0
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|
|
733.1
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|
|
|
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|
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Gross profit
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203.5
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181.6
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809.1
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655.2
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|
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544.3
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|
|
|
319.8
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|
|
248.7
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Selling, general and administrative expenses
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99.0
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|
|
|
111.1
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|
|
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389.4
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|
|
|
302.9
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|
|
|
279.8
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|
|
|
179.9
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|
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186.3
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|
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Research and development costs
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22.6
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|
|
|
19.3
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|
|
84.8
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|
|
|
70.4
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|
|
|
70.9
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|
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85.7
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|
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40.3
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Operating income
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81.9
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|
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51.2
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|
|
334.9
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|
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281.9
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|
|
|
193.6
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54.2
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22.1
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|
|
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Other income (expense)
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(30.0
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)
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|
(37.2
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)
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(155.7
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)
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102.1
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(188.4
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)
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(127.3
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)
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19.3
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Earnings from continuing operations before income taxes and
equity in earnings (loss) of unconsolidated entities
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51.9
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14.0
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|
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179.2
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384.0
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5.2
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(73.1
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)
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41.4
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Provision for income taxes
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17.9
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3.3
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57.6
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136.2
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(2.9
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)
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(32.9
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)
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12.7
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Equity in earnings (loss) of unconsolidated entities
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(0.2
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)
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2.8
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5.8
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5.0
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(3.3
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)
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Earnings (loss) from continuing operations, net of tax
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34.0
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10.7
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121.4
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250.6
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13.9
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(35.2
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)
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25.4
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Earnings (loss) from discontinued operations, net of tax
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(1.3
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)
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59.6
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98.1
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311.5
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244.2
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239.2
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168.7
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Net earnings
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32.7
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70.3
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|
219.5
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|
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562.1
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|
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258.1
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|
|
|
204.0
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|
194.1
|
|
|
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Net (earnings) loss attributable to noncontrolling interest
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0.3
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0.2
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(4.7
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)
|
|
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(0.9
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)
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1.0
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(7.4
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)
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(4.7
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)
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Net earnings attributable to FIS
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$
|
33.0
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$
|
70.5
|
|
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$
|
214.8
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|
|
$
|
561.2
|
|
|
$
|
259.1
|
|
|
$
|
196.6
|
|
|
$
|
189.4
|
|
|
|
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|
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|
|
|
|
|
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|
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Net earnings (loss) per share basic from continuing
operations attributable to FIS common stockholders(3)
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$
|
0.18
|
|
|
$
|
0.06
|
|
|
$
|
0.61
|
|
|
$
|
1.30
|
|
|
$
|
0.08
|
|
|
$
|
(0.33
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)
|
|
$
|
0.17
|
|
|
|
|
|
Net earnings (loss) per share basic from
discontinued operations attributable to FIS common
stockholders(3)
|
|
|
(0.01
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)
|
|
|
0.30
|
|
|
|
0.51
|
|
|
|
1.61
|
|
|
|
1.31
|
|
|
|
1.86
|
|
|
|
1.31
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
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Net earnings per share basic attributable to FIS
common stockholders(3)
|
|
$
|
0.17
|
|
|
$
|
0.36
|
|
|
$
|
1.12
|
|
|
$
|
2.91
|
|
|
$
|
1.39
|
|
|
$
|
1.54
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
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|
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|
11
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|
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|
|
|
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|
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|
|
|
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|
|
|
|
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|
|
|
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|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
2009(1)(2)
|
|
|
2008(1)(2)
|
|
|
2008(1)(2)
|
|
|
2007(1)(2)
|
|
|
2006(2)
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
(In millions, except per share data)
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
190.0
|
|
|
|
194.5
|
|
|
|
191.6
|
|
|
|
193.1
|
|
|
|
185.9
|
|
|
|
127.9
|
|
|
|
127.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share diluted from
continuing operations attributable to FIS common stockholders(3)
|
|
$
|
0.18
|
|
|
$
|
0.06
|
|
|
$
|
0.61
|
|
|
$
|
1.28
|
|
|
$
|
0.08
|
|
|
$
|
(0.33
|
)
|
|
$
|
0.17
|
|
|
|
|
|
Net earnings (loss) per share diluted from
discontinued operations attributable to FIS common
stockholders(3)
|
|
|
(0.01
|
)
|
|
|
0.30
|
|
|
|
0.50
|
|
|
|
1.58
|
|
|
|
1.29
|
|
|
|
1.86
|
|
|
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share diluted attributable to FIS
common stockholders(3)
|
|
$
|
0.17
|
|
|
$
|
0.36
|
|
|
$
|
1.11
|
|
|
$
|
2.86
|
|
|
$
|
1.37
|
|
|
$
|
1.53
|
|
|
$
|
1.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted
|
|
|
191.6
|
|
|
|
196.5
|
|
|
|
193.5
|
|
|
|
196.5
|
|
|
|
189.2
|
|
|
|
128.4
|
|
|
|
127.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts attributable to FIS common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations, net of tax
|
|
$
|
34.3
|
|
|
$
|
10.9
|
|
|
$
|
116.7
|
|
|
$
|
249.7
|
|
|
$
|
14.9
|
|
|
$
|
(42.6
|
)
|
|
$
|
20.7
|
|
|
|
|
|
Earnings (loss) from discontinued operations, net of tax
|
|
|
(1.3
|
)
|
|
|
59.6
|
|
|
|
98.1
|
|
|
|
311.5
|
|
|
|
244.2
|
|
|
|
239.2
|
|
|
|
168.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
33.0
|
|
|
$
|
70.5
|
|
|
$
|
214.8
|
|
|
$
|
561.2
|
|
|
$
|
259.1
|
|
|
$
|
196.6
|
|
|
$
|
189.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
eFunds Corporations results of operations are included in
earnings from September 12, 2007, the eFunds acquisition
date. |
|
|
|
(2) |
|
Certegys results of operations are included in earnings
from February 1, 2006, the date of the merger with Certegy. |
|
|
|
(3) |
|
Net earnings per share attributable to FIS common stockholders
are calculated, for all periods prior to 2006, using the shares
outstanding following FIS formation as a holding company,
adjusted as converted by the exchange ratio of 0.6396 FIS shares
for each share of Old FIS common stock in the Certegy merger. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
|
|
|
As of December 31,
|
|
|
|
2009(1)
|
|
|
2008
|
|
|
2008(1)
|
|
|
2007
|
|
|
2006
|
|
|
2005(2)
|
|
|
2004
|
|
|
|
(In millions, except per share data)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
272.0
|
|
|
$
|
328.0
|
|
|
$
|
220.9
|
|
|
$
|
355.3
|
|
|
$
|
211.8
|
|
|
$
|
133.2
|
|
|
$
|
190.9
|
|
Goodwill
|
|
|
4,190.1
|
|
|
|
5,338.7
|
|
|
|
4,194.0
|
|
|
|
5,326.8
|
|
|
|
3,737.5
|
|
|
|
1,787.7
|
|
|
|
1,757.8
|
|
Other intangible assets
|
|
|
893.1
|
|
|
|
986.1
|
|
|
|
924.3
|
|
|
|
1,030.6
|
|
|
|
1,010.0
|
|
|
|
508.8
|
|
|
|
629.2
|
|
Total assets
|
|
|
7,416.4
|
|
|
|
9,832.2
|
|
|
|
7,500.4
|
|
|
|
9,794.6
|
|
|
|
7,630.6
|
|
|
|
4,189.0
|
|
|
|
4,002.9
|
|
Total long-term debt
|
|
|
2,460.5
|
|
|
|
4,179.3
|
|
|
|
2,514.5
|
|
|
|
4,275.4
|
|
|
|
3,009.5
|
|
|
|
2,564.1
|
|
|
|
431.2
|
|
Total FIS stockholders equity
|
|
|
3,560.3
|
|
|
|
3,839.8
|
|
|
|
3,532.8
|
|
|
|
3,781.2
|
|
|
|
3,142.7
|
|
|
|
694.6
|
|
|
|
2,754.8
|
|
Noncontrolling interest
|
|
|
163.6
|
|
|
|
11.2
|
|
|
|
164.2
|
|
|
|
14.2
|
|
|
|
13.0
|
|
|
|
13.1
|
|
|
|
13.6
|
|
Total equity
|
|
|
3,723.9
|
|
|
|
3,851.0
|
|
|
|
3,697.0
|
|
|
|
3,795.4
|
|
|
|
3,155.7
|
|
|
|
707.7
|
|
|
|
2,768.4
|
|
Cash dividends declared per share
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
FIS LPS business was spun-off as of July 2, 2008. |
|
|
|
(2) |
|
On March 8, 2005, FIS paid a dividend to Fidelity National
Financial, Inc., its former parent, of $2.7 billion as part
of a recapitalization transaction. |
12
SELECTED
HISTORICAL FINANCIAL DATA OF METAVANTE
The following table of selected financial data presents
Metavante and its consolidated subsidiaries as of and for the
years ended December 31, 2008 and 2007 and the three-month
periods ended March 31, 2009 and 2008, and Metavante
Corporation and its consolidated subsidiaries as of and for the
years ended December 31, 2006, 2005, and 2004. Metavante
Corporation was a wholly owned subsidiary of M&I until the
completion of Metavantes spin-off of M&I on
November 1, 2007. You should read this information in
conjunction with Metavantes consolidated financial
statements and related notes included in Metavantes Annual
Report on
Form 10-K,
as amended by the Annual Report on
Form 10-K/A,
for the year ended December 31, 2008 and Metavantes
Quarterly Report on Form 10-Q for the three-month period
ended March 31, 2009, which are incorporated by reference
in this document and from which this information is derived. See
Where You Can Find More Information on
page [ ]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In millions, except per share data)
|
|
Results of operations information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
426.9
|
|
|
$
|
424.6
|
|
|
$
|
1,707.3
|
|
|
$
|
1,598.1
|
|
|
$
|
1,504.2
|
|
|
$
|
1,285.0
|
|
|
$
|
1,015.4
|
|
Income from operations(1)
|
|
|
89.5
|
|
|
|
85.2
|
|
|
|
337.6
|
|
|
|
152.9
|
|
|
|
272.0
|
|
|
|
228.5
|
|
|
|
146.5
|
|
Income before income taxes and noncontrolling interest(1)
|
|
|
63.2
|
|
|
|
57.2
|
|
|
|
230.7
|
|
|
|
120.0
|
|
|
|
240.5
|
|
|
|
192.9
|
|
|
|
125.8
|
|
Provision for income taxes
|
|
|
23.5
|
|
|
|
22.5
|
|
|
|
83.3
|
|
|
|
70.6
|
|
|
|
80.4
|
|
|
|
73.3
|
|
|
|
49.0
|
|
Net income(1)
|
|
|
40.3
|
|
|
|
35.0
|
|
|
|
147.4
|
|
|
|
49.5
|
|
|
|
160.1
|
|
|
|
119.5
|
|
|
|
76.8
|
|
Net earnings per share(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.34
|
|
|
$
|
0.29
|
|
|
$
|
1.24
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.34
|
|
|
$
|
0.29
|
|
|
$
|
1.23
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares, basic
|
|
|
119.4
|
|
|
|
119.0
|
|
|
|
119.1
|
|
|
|
118.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares, diluted
|
|
|
119.8
|
|
|
|
119.9
|
|
|
|
119.9
|
|
|
|
119.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial condition information (at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
908.8
|
|
|
$
|
1,061.1
|
|
|
$
|
1,099.0
|
|
|
$
|
1,013.5
|
|
|
$
|
940.6
|
|
|
$
|
905.5
|
|
|
$
|
816.7
|
|
Total assets
|
|
|
2,959.8
|
|
|
|
3,223.7
|
|
|
|
3,157.0
|
|
|
|
3,100.0
|
|
|
|
3,015.3
|
|
|
|
2,857.8
|
|
|
|
2,413.6
|
|
Current liabilities
|
|
|
601.7
|
|
|
|
917.5
|
|
|
|
825.1
|
|
|
|
856.5
|
|
|
|
571.1
|
|
|
|
647.2
|
|
|
|
659.6
|
|
Long-term debt
|
|
|
1,715.0
|
|
|
|
1,732.5
|
|
|
|
1,719.4
|
|
|
|
1,737.0
|
|
|
|
982.0
|
|
|
|
982.4
|
|
|
|
1,024.3
|
|
Shareholders equity(3)
|
|
|
423.1
|
|
|
|
322.0
|
|
|
|
361.0
|
|
|
|
299.4
|
|
|
|
1,262.1
|
|
|
|
1,035.7
|
|
|
|
576.1
|
|
Other information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from operating activities
|
|
$
|
51.4
|
|
|
$
|
121.0
|
|
|
$
|
302.5
|
|
|
$
|
345.4
|
|
|
$
|
292.4
|
|
|
$
|
250.3
|
|
|
$
|
211.2
|
|
Capital expenditures
|
|
|
31.5
|
|
|
|
37.0
|
|
|
|
137.5
|
|
|
|
143.4
|
|
|
|
109.4
|
|
|
|
112.0
|
|
|
|
87.5
|
|
Depreciation
|
|
|
9.2
|
|
|
|
9.8
|
|
|
|
38.7
|
|
|
|
40.5
|
|
|
|
40.9
|
|
|
|
40.4
|
|
|
|
35.7
|
|
Amortization
|
|
|
28.5
|
|
|
|
29.8
|
|
|
|
116.1
|
|
|
|
114.9
|
|
|
|
103.6
|
|
|
|
98.7
|
|
|
|
94.9
|
|
|
|
|
(1) |
|
2007 includes non-cash impairment charges of goodwill and other
long-lived assets and non-recurring charges associated with the
separation from M&I. |
|
(2) |
|
Weighted average shares for 2007 was calculated from
November 2, 2007 through December 31, 2007, which
represents the actual number of days that shares of
Metavantes common stock were publicly traded. Net earnings
per share were not calculated for 2006, 2005, and 2004 because
Metavante was a wholly owned subsidiary of M&I. |
|
|
|
(3) |
|
Effective January 1, 2009, Metavante adopted SFAS
No. 160, Non-controlling Interests in Consolidated
Financial Statements an amendment of ARB
No. 51. Due to the immateriality of adoption, the
retrospective adjustment has not been made to Shareholders
equity for the periods presented above. The impact of the
adoption for December 31, 2008 and 2007 would be to
increase Shareholders equity $15.4 million and
$14.1 million, respectively. |
13
SELECTED
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
The unaudited pro forma condensed combined statement of earnings
combines the historical consolidated statements of earnings of
FIS and Metavante, giving effect to the merger and the equity
capital investments, as if they had occurred on January 1,
2008. The unaudited pro forma condensed combined balance sheet
combines the historical consolidated balance sheets of FIS and
Metavante, giving effect to the merger and the equity capital
investments as if they had occurred on March 31, 2009. The
historical consolidated financial information has been adjusted
in the unaudited pro forma condensed financial statements to
give effect to pro forma events that are (1) directly
attributable to the merger, (2) factually supportable, and
(3) with respect to the statement of earnings, expected to
have a continuing impact on the combined results. The unaudited
selected pro forma combined financial information has been
derived from and should be read in conjunction with the
consolidated financial statements and the related notes of both
FIS and Metavante, which are incorporated in this document by
reference and more detailed unaudited pro forma condensed
combined financial information, including the notes thereto,
appearing elsewhere in this document. See Where You Can
Find More Information on page [ ] and
Unaudited Pro Forma Condensed Combined Financial
Information on page [ ].
The unaudited pro forma condensed combined financial information
is presented for illustrative purposes only and does not
indicate the financial results of the combined companies had the
companies actually been combined at the beginning of each period
presented, nor the impact of possible business model changes.
The unaudited pro forma condensed combined financial information
also does not consider any potential impacts of current market
conditions on revenues, expense efficiencies, asset
dispositions, and share repurchases, among other factors. In
addition, as explained in more detail in the accompanying notes
to the unaudited pro forma condensed combined financial
information, the preliminary allocation of the pro forma
purchase price reflected in the unaudited pro forma condensed
combined financial information is subject to adjustment and may
vary significantly from the actual purchase price allocation
that will be recorded upon completion of the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three-Month
|
|
|
|
|
|
|
Period Ended
|
|
|
For The Year Ended
|
|
|
|
March 31, 2009
|
|
|
December 31, 2008
|
|
|
|
(In millions, except per share data)
|
|
|
Unaudited Pro Forma Condensed Combined Statement of Earnings
Data:
|
|
|
|
|
|
|
|
|
|
|
Processing and services revenues
|
|
$
|
1,206
|
.4
|
|
|
$
|
5,072
|
.1
|
|
Cost of revenues
|
|
$
|
891
|
.5
|
|
|
$
|
3,805
|
.4
|
|
Operating Income
|
|
$
|
144
|
.4
|
|
|
$
|
517
|
.3
|
|
Net earnings from continuing operations attributable to
FIS/Metavante
|
|
$
|
59
|
.6
|
|
|
$
|
159
|
.9
|
|
Net earnings per share basic from continuing
operations attributable to FIS/Metavante
|
|
$
|
0
|
.16
|
|
|
$
|
0
|
.43
|
|
Net earnings per share diluted from continuing
operations attributable to FIS/Metavante
|
|
$
|
0
|
.16
|
|
|
$
|
0
|
.42
|
|
Weighted average shares outstanding basic
|
|
|
368
|
.2
|
|
|
|
368
|
.6
|
|
Weighted average shares outstanding diluted
|
|
|
381
|
.1
|
|
|
|
377
|
.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
434
|
.8
|
|
|
|
|
|
|
Total current assets
|
|
$
|
1,933
|
.1
|
|
|
|
|
|
|
Working capital
|
|
$
|
591
|
.8
|
|
|
|
|
|
|
Total assets
|
|
$
|
13,076
|
.6
|
|
|
|
|
|
|
Long-term debt, excluding current portion
|
|
$
|
3,731
|
.2
|
|
|
|
|
|
|
Total FIS/Metavante stockholders equity
|
|
$
|
6,897
|
.4
|
|
|
|
|
|
|
14
COMPARATIVE
PER SHARE DATA
The following table sets forth for FIS common stock and
Metavante common stock certain historical, pro forma and pro
forma-equivalent per share financial information. The pro forma
and pro forma-equivalent per share information give effect to
the merger and equity capital investments as if they had
occurred on the dates presented, in the case of the book value
data, and as if it had occurred on January 1, 2008, in the
case of the net income and dividends paid data. The unaudited
pro forma data in the tables assume that the merger is accounted
for using the acquisition method of accounting and represents a
current estimate based on available information of the combined
companys results of operations. The pro forma financial
adjustments record the assets and liabilities of Metavante at
their estimated fair values and are subject to adjustment as
additional information becomes available and as additional
analyses are performed. See Unaudited Pro Forma Condensed
Combined Financial Information on
page [ ]. The information in the following table
is based on, and should be read together with, the historical
financial information that we have presented in the prior
filings of FIS and Metavante with the SEC. See Where You
Can Find More Information on page [ ].
We anticipate that the merger will provide the combined company
with financial benefits that include reduced operating expenses
and revenue enhancement opportunities. The unaudited pro forma
information, while helpful in illustrating the financial
characteristics of the combined company under one set of
assumptions, does not reflect the impact of possible business
model changes as a result of current market conditions which may
impact revenues, expense efficiencies, asset dispositions, share
repurchases and other factors. It also does not necessarily
reflect what the historical results of the combined company
would have been had our companies been combined during these
periods nor is it indicative of the results of operations in
future periods or the future financial position of the combined
company. The Comparative Per Share Data Table for the year ended
December 31, 2008 and the three months ended March 31,
2009 combines the historical income per share data of FIS and
subsidiaries and Metavante and subsidiaries giving effect to the
transactions as if the merger, using the acquisition method of
accounting, and the equity capital investments had become
effective on January 1, 2008. The pro forma adjustments are
based upon available information and certain assumptions that
FIS management believes are reasonable. Upon completion of the
merger, the operating results of Metavante will be reflected in
the consolidated financial statements of FIS on a prospective
basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalent
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
FIS
|
|
|
Metavante
|
|
|
Pro Forma
|
|
|
per share of
|
|
|
|
Historical
|
|
|
Historical
|
|
|
Combined
|
|
|
Metavante(1)
|
|
|
As of and for the Year Ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share of common stock from continuing
operations
|
|
$
|
0.61
|
|
|
$
|
1.24
|
|
|
$
|
0.43
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share of common stock from continuing
operations
|
|
$
|
0.61
|
|
|
$
|
1.23
|
|
|
$
|
0.42
|
|
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share of common stock
|
|
$
|
18.51
|
|
|
$
|
3.01
|
|
|
$
|
18.56
|
|
|
$
|
25.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share of common stock
|
|
$
|
0.20
|
|
|
$
|
|
|
|
$
|
0.20
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three-Month Period Ended
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share of common stock from continuing
operations
|
|
$
|
0.18
|
|
|
$
|
0.34
|
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share of common stock from continuing
operations
|
|
$
|
0.18
|
|
|
$
|
0.34
|
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share of common stock
|
|
$
|
18.62
|
|
|
$
|
3.40
|
|
|
$
|
18.73
|
|
|
$
|
25.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share of common stock
|
|
$
|
0.05
|
|
|
$
|
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects Metavante shares at the exchange ratio of 1.35 |
15
RISK
FACTORS
In addition to the other information included in and
incorporated by reference into this document, including the risk
factors and other information set forth in the Annual Report on
Form 10-K
of FIS for the fiscal year ended December 31, 2008, filed
with the SEC on February 27, 2009 (as amended on
March 10, 2009), and in the Annual Report on
Form 10-K
of Metavante for the fiscal year ended December 31, 2008,
filed with the SEC on February 20, 2009 (as amended on
April 30, 2009), and the matters addressed in
Cautionary Statement Regarding Forward-Looking
Statements, you should carefully consider the following
risk factors before deciding whether to vote for the approval
and adoption of the merger agreement and the transactions it
contemplates, in the case of Metavante shareholders, or for the
issuances of shares of FIS common stock, in the case of FIS
shareholders. For further discussion of these and other risk
factors, please see FIS and Metavantes periodic
reports and other documents incorporated by reference into this
document. See Where You Can Find More Information,
beginning on page [ ].
Because
the exchange ratio is fixed and will not be adjusted, and the
market price of shares of FIS common stock will fluctuate,
Metavante and FIS shareholders cannot be sure of the market
value of the shares of FIS common stock at the time they are
issued in the merger.
The exchange ratio in the merger is fixed and will not be
adjusted to reflect any increase or decrease in the price of FIS
common stock or Metavante common stock. If the price of FIS
common stock has declined from currently prevailing levels as of
the date the merger is completed, the market value of the FIS
shares received by Metavante shareholders upon completion of the
merger will decline commensurately relative to the value on the
date of this document. The market price of a share of FIS common
stock on the date of the completion of the merger is likely to
be different, and may be lower, than it was on the date of this
document or on the date of the FIS and Metavante shareholder
meetings.
Stock price changes may result from a variety of factors (many
of which may not be within FIS or Metavantes
control), including;
|
|
|
|
|
general market and economic conditions;
|
|
|
|
changes in the businesses, operations and prospects of FIS or
Metavante;
|
|
|
|
investor behavior and strategies, including assessments as to
whether and when the merger will be completed; and
|
|
|
|
governmental, litigation
and/or
regulatory developments or considerations.
|
Shareholders of FIS and Metavante are urged to obtain current
market quotations for FIS and Metavante common stock.
We may
fail to realize the anticipated cost savings and other financial
benefits of the merger on the anticipated schedule, if at
all.
To achieve planned financial benefits of the merger, FIS will
need to successfully integrate Metavantes operations into
its own in a timely and efficient manner and will need to
execute transitional matters successfully, including integrating
new members of FIS management and the retention of key Metavante
personnel. Currently, each company operates as an independent
public company. Achieving the anticipated cost savings and
financial benefits of the merger will depend in part upon
whether FIS integrates Metavantes businesses in an
efficient and effective manner. There can be no assurance that
FIS will be able to accomplish this integration process smoothly
or successfully. In addition, the integration of certain
operations following the merger will require the dedication of
significant management resources, which will compete for
managements attention with its efforts to manage the
day-to-day business of the combined company. Any inability to
realize the full extent of, or any of, the anticipated cost
savings and financial benefits of the merger, as well as any
delays encountered in the integration process, could have an
adverse effect on the business and results of operations of the
combined company, which may affect the market price of FIS
common stock.
16
Members
of Metavantes and FIS management and certain
directors have interests in the merger and the investments,
respectively, that are different from, or in addition to, your
interests.
Executive officers of FIS and Metavante negotiated the terms of
the merger agreement, and the FIS and Metavante boards approved
the merger, and recommended that their respective shareholders
vote to approve, the issuance of shares in connection with the
merger or the merger itself, as applicable. In addition,
executive officers of FIS negotiated the terms of the investment
agreement, and the FIS board approved, and recommended that its
shareholders vote to approve, the issuance of shares in
connection with the investments. In considering these facts and
the other information contained in this document, you should be
aware that some members of Metavantes and FIS
management and certain members of their boards have economic
interests in the merger and the investments, respectively, that
are different from, or in addition to, the interests of FIS and
Metavante shareholders generally. Please see FIS
Proposal 1 and Metavante Proposal 1: The
Merger Interests of Certain Persons in the
Merger and FIS Proposal 2 and Proposal 3:
The Investments Interests of Certain Persons in the
Investments for information about these economic interests.
The
merger is subject to the receipt of consents and approvals from
government entities. Such approvals may not be obtained or may
impose conditions that could have an adverse effect on the
combined company following the merger.
Completion of the merger is conditioned, among other things,
upon the receipt of certain governmental approvals, including
the expiration or termination of the applicable waiting period
under the HSR Act. Although FIS and Metavante have agreed in the
merger agreement to use their reasonable best efforts to obtain
the requisite governmental approvals, there can be no assurance
that these approvals will be obtained. In addition, the
governmental authorities from which these approvals are required
may impose conditions on the completion of the merger or require
changes to the terms of the merger. Although FIS and Metavante
do not currently expect that any such conditions or changes
would be imposed, there can be no assurance that they will not
be, and such conditions or changes could have the effect of
delaying completion of the merger or imposing additional costs
on or limiting the revenues of FIS following the merger. In
addition, under the terms of the merger agreement, neither party
is obligated to complete the merger if any such condition or
change would reasonably be expected to have a material adverse
effect (as measured on a scale relative to Metavante) on either
party or the surviving company in the merger.
The
shares of FIS common stock to be received by Metavante
shareholders as a result of the merger will have different
rights from the shares of Metavante common stock.
Upon the completion of the merger, Metavante shareholders will
become FIS shareholders and their rights as shareholders will be
governed by the amended and restated articles of incorporation
and bylaws of FIS and by the applicable laws of the State of
Georgia, where FIS is incorporated. The rights associated with
Metavante common stock are different from the rights associated
with FIS common stock. Please see Comparison of Rights of
FIS and Metavante Shareholders beginning on
page [ ] for a discussion of the different
rights associated with FIS common stock.
Failure
to complete the merger could negatively impact FIS and
Metavante.
If the merger is not completed, the ongoing businesses of FIS or
Metavante may be adversely affected and there may be various
consequences, including:
|
|
|
|
|
the business of each party may have been adversely impacted by
the failure to pursue other beneficial opportunities due to the
focus on the merger, without realizing any of the anticipated
benefits of the merger; and
|
|
|
|
the market price of the common stock of FIS
and/or
Metavante may be negatively impacted.
|
17
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference certain
forward-looking statements, including statements about the
financial condition, results of operations, earnings outlook and
prospects of each of FIS and Metavante and the benefits of the
merger between FIS and Metavante, which are subject to numerous
assumptions, risks, and uncertainties. These forward-looking
statements are found at various places throughout this document,
including in the section entitled Risk Factors
beginning on page [ ]. You can find many of
these statements by looking for words such as plan,
believe, expect, intend,
anticipate, estimate,
project, potential, possible
or other similar expressions. Actual results could differ
materially from those contained or implied by such statements
for a variety of factors, including:
|
|
|
|
|
the effect of governmental regulations, including the
possibility that there are unexpected delays in obtaining
regulatory approvals;
|
|
|
|
any changes in economic conditions;
|
|
|
|
competitive pressures on product pricing and services;
|
|
|
|
the risk that the merger may fail to achieve beneficial
synergies or that it may take longer than expected to do so;
|
|
|
|
the risk of reduction in revenue from the elimination of
existing and potential customers due to consolidation in the
banking, retail and financial services industries and its impact
on the customer bases of FIS and Metavante;
|
|
|
|
the failure to adapt to changes in technology or in the
marketplace;
|
|
|
|
the failure to obtain approval of FIS and Metavantes
shareholders;
|
|
|
|
the effect of litigation on the companies or the completion of
the merger;
|
|
|
|
delays associated with integrating the companies, including
employees and operations, after the merger is completed;
|
|
|
|
actions that may be taken by the competitors, customers and
suppliers of FIS or Metavante that may cause the merger to be
delayed or not completed; and
|
|
|
|
other risks discussed and identified in public filings with the
SEC made by FIS or Metavante.
|
All forward-looking statements included in this document are
based on information available at the time of the document.
Neither FIS nor Metavante assumes any obligation to update any
forward-looking statement.
For additional information about factors that could cause actual
results to differ materially from those expressed or implied by
the forward-looking statements, please see the reports that FIS
and Metavante have filed with the SEC as described under
Where You Can Find More Information beginning on
page [ ].
18
THE FIS
SPECIAL MEETING
This section contains information from FIS for FIS shareholders
about the special meeting of FIS shareholders that has been
called to consider and vote upon the proposal to approve the
issuance of FIS common stock in the merger and the proposals to
approve the issuance of shares of FIS common stock to the equity
capital investors.
Together with this document, we are also sending you a notice of
the FIS special meeting and a form of proxy that is solicited by
the FIS board of directors. The FIS special meeting will be held
at [ ] on [ ], 2009 at
[ ], local time.
Matters
to Be Considered
The purpose of the FIS special meeting is to consider and vote
on:
|
|
|
|
|
a proposal to approve the issuance of FIS common stock to
Metavante shareholders in the merger, as contemplated by the
merger agreement;
|
|
|
|
a proposal to approve the issuance of FIS common stock in
connection with the purchase by THL, as contemplated by the
investment agreement;
|
|
|
|
a proposal to approve the issuance of FIS common stock in
connection with the purchase by FNF, as contemplated by the
investment agreement; and
|
|
|
|
a proposal to approve the adjournment of the special meeting,
including, if necessary or appropriate, to solicit additional
proxies in the event that there are not sufficient votes at the
time of the special meeting to approve any of the foregoing
proposals.
|
Proxies
Each copy of this document mailed to holders of FIS common stock
is accompanied by a form of proxy with instructions for voting
by mail, by telephone or through the Internet. If you hold stock
in your name as a shareholder of record and are voting by mail,
you should complete and return the proxy card accompanying this
document to ensure that your vote is counted at the special
meeting, or at any adjournment or postponement of the special
meeting, regardless of whether you plan to attend the special
meeting. You may also vote your shares by telephone or through
the Internet. Information and applicable deadlines for voting by
telephone or through the Internet are set forth in the enclosed
proxy card instructions. If you hold your stock in street
name through a bank or broker, you must direct your bank
or broker to vote in accordance with the instructions you have
received from your bank or broker.
If you hold stock in your name as a shareholder of record, you
may revoke any proxy at any time before it is voted by signing
and returning a proxy card with a later date, delivering a
written revocation letter to FIS Corporate Secretary, or
by attending the special meeting in person, notifying the
Corporate Secretary that you are revoking your proxy, and voting
by ballot at the special meeting. If you have voted your shares
by telephone or through the Internet, you may revoke your prior
telephone or Internet vote by recording a different vote, or by
signing and returning a proxy card dated as of a date that is
later than your last telephone or Internet vote.
Any shareholder entitled to vote in person at the special
meeting may vote in person regardless of whether a proxy has
been previously given, but the mere presence (without notifying
the Corporate Secretary) of a shareholder at the special meeting
will not constitute revocation of a previously given proxy.
Written notices of revocation and other communications about
revoking your proxy should be addressed to:
Fidelity National Information Services, Inc.
601 Riverside Avenue
Jacksonville, Florida 32204
|
|
|
|
Attention:
|
Ronald D. Cook
|
Executive Vice President,
General Counsel and Corporate Secretary
If your shares are held in street name by a bank or
broker, you should follow the instructions of your bank or
broker regarding the revocation of proxies.
19
All shares represented by valid proxies that we receive through
this solicitation, and that are not revoked, will be voted in
accordance with the instructions you provide on the proxy card
or as you instruct via Internet or telephone. If you make no
specification on your proxy card as to how you want your shares
voted before signing and returning it, your proxy will be voted
FOR approval of the issuance of shares of FIS common
stock in the merger, FOR approval of the proposals
to issue shares of FIS common stock to the equity capital
investors, and FOR approval of the proposal to
adjourn the special meeting, if necessary or appropriate, to
solicit additional proxies. According to the FIS amended and
restated bylaws, only business within the purpose or purposes
described in the notice of special meeting may be conducted at
the meeting.
Solicitation
of Proxies
In accordance with the merger agreement, the cost of proxy
solicitation for the FIS special meeting will be borne by FIS,
except that FIS and Metavante will share equally all expenses
incurred in connection with the filing of the registration
statement of which this document forms a part with the SEC and
the printing and mailing of this document. FIS and Metavante
have also made arrangements with Georgeson to assist them in
soliciting proxies and have agreed to pay it $15,000 and $7,500,
respectively, plus reasonable expenses for these services. If
necessary, FIS may use several of its regular employees, who
will not be specially compensated, to solicit proxies from FIS
shareholders, either personally or by telephone, facsimile,
letter or other electronic means. FIS will also request
brokerage firms, nominees, custodians and fiduciaries to forward
proxy materials to the beneficial owners of shares held of
record on [ ], 2009 and will provide customary
reimbursement to such firms for the cost of forwarding these
materials.
Record
Date
The close of business on [ ], 2009
has been fixed as the record date for determining the FIS
shareholders entitled to receive notice of and to vote at the
special meeting. At that time,
[ ] shares of FIS common stock
were outstanding, held by approximately
[ ] holders of record.
Quorum
In order to conduct voting at the special meeting, there must be
a quorum. The proposal to approve the issuance of shares of FIS
common stock in the merger and the proposals to issue shares of
FIS common stock to the equity capital investors each have a
quorum requirement, under the applicable New York Stock Exchange
rules, that the total votes cast represent a majority of the
votes entitled to be cast on such proposal; therefore a FIS
shareholders failure to vote on one of the proposals, a
broker non-vote on one of the proposals or an abstention will
count against obtaining a quorum for such proposal.
Vote
Required
Each share of FIS common stock outstanding on the record date
entitles the holder to one vote on each matter to be voted upon
by shareholders at the special meeting. The proposal to approve
the issuance of shares of FIS common stock in the merger and the
proposals to issue shares of FIS common stock to the equity
capital investors each requires the affirmative vote of a
majority of all votes cast by the holders of common stock at a
meeting. If a quorum is present, a FIS shareholders
failure to vote, a broker non-vote or an abstention will not
count as a vote against the proposal to approve the issuance of
shares of FIS common stock in the merger or the proposals to
issue shares of FIS common stock to the equity capital investors
because approval of each proposal is based on the affirmative
vote of a majority of votes cast.
The special meeting may be adjourned by the holders of a
majority of the voting shares represented at the meeting,
whether or not a quorum is present, to reconvene at a specific
time and place, but no later than 120 days after the date
fixed for the original meeting.
The FIS board of directors urges FIS shareholders to promptly
vote by: accessing the Internet site listed in the proxy card
instructions if voting through the Internet; calling the
toll-free number listed in the proxy card instructions if voting
by telephone; or completing, dating, and signing the
accompanying
20
proxy card and returning it promptly in the enclosed
postage-paid envelope. If you hold your stock in
street name through a bank or broker, please vote by
following the voting instructions of your bank or broker.
Shareholders will vote at the meeting by ballot. Votes cast at
the meeting, in person or by proxy, will be tallied by FIS
inspector of election.
As of the record date, directors and executive officers of FIS
had the right to vote approximately
[ ] shares of FIS common
stock, or approximately [ ]% of the
outstanding FIS shares entitled to vote at the special meeting.
FIS currently expects that these individuals will vote their
shares of FIS common stock in favor of the proposals to be
presented at the special meeting.
Recommendation
of the FIS Board of Directors
The FIS board of directors believes that the merger is in the
best interests of FIS and its shareholders and has unanimously
approved and adopted the merger agreement and the transactions
it contemplates. The FIS board of directors also believes that
the equity capital investments are in the best interests of FIS
and its shareholders and has unanimously approved and adopted
the investment agreement and the transactions it contemplates.
For the factors considered by the FIS board of directors in
reaching its decision to approve the merger agreement and the
investment agreement and the transactions they each contemplate,
see FIS Proposal 1 and Metavante Proposal 1: The
Merger FIS Reasons for the Merger and the
Investments; Recommendation of the FIS Board of Directors.
The FIS board of directors unanimously recommends that the
FIS shareholders vote FOR the proposal to issue
shares of FIS common stock in the merger and FOR the
proposals to issue shares of FIS common stock to the equity
capital investors.
Attending
the Meeting
All holders of FIS common stock, including shareholders of
record and shareholders who hold their shares through banks,
brokers, nominees or any other holder of record, are invited to
attend the special meeting. Shareholders of record can vote in
person at the special meeting. If you are not a shareholder of
record, you must obtain a proxy executed in your favor, from the
record holder of your shares, such as a broker, bank or other
nominee, to be able to vote in person at the special meeting. If
you plan to attend the special meeting, you must hold your
shares in your own name or have a letter from the record holder
of your shares confirming your ownership and you must bring a
form of personal photo identification with you in order to be
admitted. FIS reserves the right to refuse admittance to anyone
without proper proof of share ownership and without proper photo
identification.
21
THE
METAVANTE SPECIAL MEETING
This section contains information from Metavante for Metavante
shareholders about the special meeting of Metavante shareholders
that has been called to consider a proposal to approve and adopt
the merger agreement and the transactions it contemplates.
Together with this document, we are also sending you a notice of
the Metavante special meeting and a form of proxy that is
solicited by the Metavante board of directors. The Metavante
special meeting will be held at
[ ], on
[ ], 2009 at
[ ], local time.
Matters
to Be Considered
The purpose of the Metavante special meeting is to consider and
vote on:
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a proposal to approve and adopt the merger agreement and the
transactions it contemplates; and
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a proposal to approve the adjournment of the special meeting,
including, if necessary or appropriate, to solicit additional
proxies in the event that there are not sufficient votes at the
time of the special meeting to approve the foregoing proposal.
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Proxies
Each copy of this document mailed to holders of Metavante common
stock is accompanied by a form of proxy with instructions for
voting by mail, by telephone or through the Internet. If you
hold stock in your name as a shareholder of record and are
voting by mail, you should complete and return the proxy card
accompanying this document to ensure that your vote is counted
at the special meeting, or at any adjournment or postponement of
the special meeting, regardless of whether you plan to attend
the special meeting. You may also vote your shares by telephone
or through the Internet. Information and applicable deadlines
for voting by telephone or through the Internet are set forth in
the enclosed proxy card instructions. If you hold your stock in
street name through a bank or broker, you must
direct your bank or broker to vote in accordance with the
instructions you have received from your bank or broker.
If you hold stock in your name as a shareholder of record, you
may revoke any proxy at any time before it is voted by signing
and returning a proxy card with a later date, delivering a
written revocation letter to Metavantes Secretary, or by
attending the special meeting in person, notifying the Secretary
that you are revoking your proxy, and voting by ballot at the
special meeting. If you have voted your shares by telephone or
through the Internet, you may revoke your prior telephone or
Internet vote by recording a different vote, or by signing and
returning a proxy card dated as of a date that is later than
your last telephone or Internet vote.
Any shareholder entitled to vote in person at the special
meeting may vote in person regardless of whether a proxy has
been previously given, but the mere presence (without notifying
the Secretary) of a shareholder at the special meeting will not
constitute revocation of a previously given proxy. Written
notices of revocation and other communications about revoking
your proxy should be addressed to:
Metavante Technologies, Inc.
4900 West Brown Deer Road
Milwaukee, Wisconsin 53223
Attention: Donald W. Layden, Jr.
Senior Executive Vice President,
General Counsel and Secretary
If your shares are held in street name by a bank or
broker, you should follow the instructions of your bank or
broker regarding the revocation of proxies.
If you hold shares of Metavante common stock as a participant in
the Metavante Retirement Program, the trustee for the plan will
vote the shares you hold through the plan as you direct. The
trustee for the plan will provide plan participants who hold
Metavante common stock through the plan with forms on which
22
participants may communicate their voting instructions. If
voting instructions are not received for shares held in the
plan, those shares will be voted by the trustee as directed by
the plan committee.
All shares represented by valid proxies that we receive through
this solicitation, and that are not revoked, will be voted in
accordance with the instructions you provide on the proxy card
or as you instruct via Internet or telephone. If you make no
specification on your proxy card as to how you want your shares
voted before signing and returning it, your proxy will be voted
FOR approval and adoption of the merger agreement
and the transactions it contemplates, and FOR
approval of the proposal to adjourn the special meeting, if
necessary or appropriate, to solicit additional proxies.
Under Wisconsin law, only business within the purpose described
in the notice of special meeting may be conducted at the meeting.
Solicitation
of Proxies
In accordance with the merger agreement, the cost of proxy
solicitation for the Metavante special meeting will be borne by
Metavante, except that FIS and Metavante will share equally all
expenses incurred in connection with the filing of the
registration statement of which this document forms a part with
the SEC and the printing and mailing of this document. In
addition to the use of the mail, proxies may be solicited by
officers and directors and regular employees of Metavante,
without additional remuneration, by personal interview,
telephone, letter, facsimile or other electronic means. FIS and
Metavante have also made arrangements with Georgeson to assist
them in soliciting proxies and have agreed to pay it $15,000 and
$7,500, respectively, plus reasonable expenses for these
services. Metavante will also request brokerage firms, nominees,
custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares held of record on
[ ], 2009 and will provide
customary reimbursement to such firms for the cost of forwarding
these materials.
Record
Date
The close of business on [ ], 2009
has been fixed as the record date for determining the Metavante
shareholders entitled to receive notice of and to vote at the
special meeting. At that time,
[ ] shares of Metavante common
stock were outstanding, held by approximately
[ ] holders of record.
Quorum
A majority of the votes entitled to be cast by the shares
entitled to vote must be present or represented by proxy to
constitute a quorum for action on the matters to be voted upon
at the special meeting. All shares of Metavante common stock
represented at the Metavante special meeting, including
abstentions and broker non-votes, will be treated as present for
purposes of determining the presence or absence of a quorum for
all matters voted on at the Metavante special meeting.
Vote
Required
Each share of Metavante common stock outstanding on the record
date entitles the holder to one vote on each matter to be voted
upon by shareholders at the special meeting. Approval and
adoption of the merger agreement and the transactions it
contemplates requires the affirmative vote of a majority of all
the votes entitled to be cast by holders of outstanding shares
of Metavante common stock. Because the affirmative vote of a
majority of all the votes entitled to be cast by the holders of
Metavante common stock is needed for us to proceed with the
merger, the failure to vote by proxy or in person will have the
same effect as a vote against the merger. Abstentions also will
have the same effect as a vote against the merger.
Accordingly, the Metavante board of directors urges Metavante
shareholders to promptly vote by completing, dating, and signing
the accompanying proxy card and returning it promptly in the
enclosed postage-paid envelope, or, if you hold your stock in
street name through a bank or broker, by following
the voting instructions of your bank or broker. If you hold
stock in your name as a shareholder of record, you may complete,
sign, date and mail your proxy card in the enclosed postage paid
return envelope as soon as possible, vote by calling the
toll-free number listed on the Metavante proxy card, vote by
accessing the Internet site listed on the Metavante proxy card
or vote in person at the Metavante special meeting. If you hold
your stock in street name through a bank or broker,
you must direct your bank or broker to vote in
23
accordance with the voting instruction form included with these
materials and forwarded to you by your bank or broker. This
voting instruction form provides instructions on voting by mail,
telephone or on the Internet.
Any adjournments of the special meeting by vote of shareholders
for the purpose of soliciting additional proxies or for any
other purpose must be approved by the affirmative vote of a
majority of the shares represented at the special meeting.
Shareholders will vote at the meeting by ballot. Votes cast at
the meeting, in person or by proxy, will be tallied by
Metavantes inspector of election.
As of the record date, directors and executive officers of
Metavante had the right to vote approximately
[ ] shares of Metavante common
stock, or approximately [ ]% of the
outstanding Metavante shares entitled to vote at the special
meeting. Metavante currently expects that these individuals will
vote their shares of Metavante common stock in favor of the
proposals to be presented at the special meeting.
WPM has entered into an agreement with FIS, Merger Sub and
Metavante whereby, subject to the terms and conditions of that
agreement, it has agreed to vote all of the Metavante shares it
holds in favor of the merger. As of the date of this document,
WPM holds in the aggregate approximately 25% of the outstanding
shares of Metavante common stock.
Recommendation
of the Metavante Board of Directors
The Metavante board of directors has approved and adopted the
merger agreement and the transactions it contemplates, including
the merger. The Metavante board of directors determined that the
merger agreement and the transactions it contemplates are
advisable and in the best interests of Metavante and its
shareholders. The Metavante board of directors unanimously
recommends that the Metavante shareholders vote FOR
the proposal to approve and adopt the merger agreement and the
transactions it contemplates. See FIS Proposal 1
and Metavante Proposal 1: The Merger
Metavantes Reasons for the Merger; Recommendation of the
Metavante Board of Directors on
page [ ] for a more detailed discussion of
the Metavante board of directors recommendation.
Attending
the Meeting
All holders of Metavante common stock, including shareholders of
record and shareholders who hold their shares through banks,
brokers, nominees or any other holder of record, are invited to
attend the special meeting. Shareholders of record can vote in
person at the special meeting. If you are not a shareholder of
record, you must obtain a proxy executed in your favor, from the
record holder of your shares, such as a broker, bank or other
nominee, to be able to vote in person at the special meeting. If
you plan to attend the special meeting, you must hold your
shares in your own name or have a letter from the record holder
of your shares confirming your ownership and you must bring a
form of personal photo identification with you in order to be
admitted. Metavante reserves the right to refuse admittance to
anyone without proper proof of share ownership and without
proper photo identification.
24
INFORMATION
ABOUT THE COMPANIES
Fidelity
National Information Services, Inc.
FIS is a leading provider of technology solutions, processing
services and information-based services to the financial
services industry. FIS offers a diversified service mix and
benefits from the opportunity to cross-sell multiple services
across its broad customer base. FIS is a member of the Standard
and Poors 500 Index. As of December 31, 2008, FIS had
over 14,000 customers in over 90 countries spanning all segments
of the financial services industry. These customers include 40
of the top 50 world banks, including nine of the top 10, as
ranked by Bankalmanac.com as of April 30, 2008, as well as
mid-tier and community banks, credit unions, commercial lenders,
automotive financial institutions, retailers and international
customers. The company is located on the web at
www.fidelityinfoservices.com
Additional information about FIS and its subsidiaries is
included in documents incorporated by reference in this
document. See Where You Can Find More Information on
page [ ].
The principal executive office of FIS is located at 601
Riverside Avenue, Jacksonville, Florida 32204, and its telephone
number is
(904) 854-5000.
Metavante
Technologies, Inc.
Metavante Technologies wholly owned operating subsidiary,
Metavante Corporation, delivers banking and payments
technologies to approximately 8,000 financial services firms and
businesses worldwide. Metavante products and services drive
account processing for deposit, loan and trust systems,
image-based and conventional check processing, electronic funds
transfer, consumer healthcare payments, electronic presentment
and payment transactions, outsourcing, and payment network
solutions including the
NYCE®
Payment Network, an ATM/PIN debit network. Metavante began
operations in 1964 as a wholly owned subsidiary of M&I
providing community and regional banks with dependable,
outsourced account processing services with a high level of
client service. Since then, Metavante has become a provider of
innovative, high quality products and services to the financial
services, commercial, and health care insurance industries. With
over 50 locations, Metavante recorded approximately
$1.7 billion in revenue for the year ended
December 31, 2008. The company is located on the web at
www.metavante.com.
Additional information about Metavante and its subsidiaries is
included in documents incorporated by reference in this
document. See Where You Can Find More Information on
page [ ].
The principal executive office of Metavante is located at
4900 West Brown Deer Road, Milwaukee, Wisconsin 53223, and
its telephone number is
(414) 357-2290.
Cars
Holdings, LLC
Cars Holdings, LLC, also referred to as Merger Sub, is a newly
formed Delaware limited liability company and a wholly owned
subsidiary of FIS. The company was formed solely for the purpose
of effecting the proposed merger with Metavante and has not
carried on any activities other than in connection with the
proposed merger.
The principal executive office of Merger Sub is located at 601
Riverside Avenue, Jacksonville, Florida 32204, and its telephone
number is
(904) 854-5000.
25
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined statements of
earnings combine the historical consolidated statements of
earnings of FIS and Metavante, giving effect to the merger and
the equity capital investments, as if they had occurred on
January 1, 2008. The unaudited pro forma condensed combined
balance sheet combines the historical consolidated balance
sheets of FIS and Metavante, giving effect to the merger and the
equity capital investments as if they had occurred on
March 31, 2009. The historical consolidated financial
information has been adjusted in the unaudited pro forma
condensed combined financial statements to give effect to pro
forma events that are (1) directly attributable to the
merger, (2) factually supportable, and (3) with
respect to the statements of earnings, expected to have a
continuing impact on the combined results. The unaudited pro
forma condensed combined financial information should be read in
conjunction with the accompanying notes to the unaudited pro
forma condensed combined financial statements. In addition, the
unaudited pro forma condensed combined financial information was
based on and should be read in conjunction with the following,
which are incorporated by reference into this joint proxy
statement/prospectus:
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separate historical financial statements of FIS as of and for
the three months ended March 31, 2009 and the related notes
included in FIS Quarterly Report on Form 10-Q for the
three-month period ended March 31, 2009,
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separate historical financial statements of FIS as of and for
the year ended December 31, 2008 and the related notes
included in FIS Annual Report on
Form 10-K
for the year ended December 31, 2008, as amended by the
Annual Report on
Form 10-K/A,
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separate historical financial statements of Metavante as of and
for the three months ended March 31, 2009 and the related
notes included in Metavantes Quarterly Report on
Form 10-Q for the three-month period ended March 31,
2009, and
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separate historical financial statements of Metavante as of and
for the year ended December 31, 2008 and the related notes
included in Metavantes Annual Report on Form
10-K for the
year ended December 31, 2008, as amended by the Annual
Report on Form 10-K/A.
|
The unaudited pro forma condensed combined financial information
has been presented for informational purposes only. The pro
forma information is not necessarily indicative of what the
combined companys financial position or results of
operations actually would have been had the merger and the
equity capital investments been completed as of the dates
indicated. In addition, the unaudited pro forma condensed
combined financial information does not purport to project the
future financial position or operating results of the combined
company. Transactions between FIS and Metavante during the
periods presented in the unaudited pro forma condensed combined
financial statements have been eliminated.
The unaudited pro forma condensed combined financial information
has been prepared using the acquisition method of accounting
under existing U.S. generally accepted accounting
principles (GAAP), which are subject to change and
interpretation. FIS has been treated as the acquirer in the
merger for accounting purposes. The acquisition accounting is
dependent upon certain valuations and other studies that have
yet to commence or progress to a stage where there is sufficient
information for a definitive measurement. Accordingly, the pro
forma adjustments are preliminary and have been made solely for
the purpose of providing unaudited pro forma condensed combined
financial information. Differences between these preliminary
estimates and the final acquisition accounting will occur and
these differences could have a material impact on the
accompanying unaudited pro forma condensed combined financial
statements and the combined companys future results of
operations and financial position.
The unaudited pro forma condensed combined financial information
does not reflect any cost savings, operating synergies or
revenue enhancements that the combined company may achieve as a
result of the merger or the costs to integrate the operations of
FIS and Metavante or the costs necessary to achieve these cost
savings, operating synergies and revenue enhancements.
26
Unaudited
Pro Forma Condensed Combined Balance Sheet
As of
March 31, 2009
(in
millions)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
FIS
|
|
|
Metavante
|
|
|
Adjustments
|
|
|
Combined
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
272.0
|
|
|
$
|
274.5
|
|
|
$
|
(111.7
|
) (a)
|
|
$
|
434.8
|
|
Settlement deposits
|
|
|
39.2
|
|
|
|
226.7
|
|
|
|
|
|
|
|
265.9
|
|
Trade receivables, net
|
|
|
498.8
|
|
|
|
247.7
|
|
|
|
|
|
|
|
746.5
|
|
Settlement receivables
|
|
|
42.7
|
|
|
|
73.6
|
|
|
|
|
|
|
|
116.3
|
|
Other receivables
|
|
|
110.7
|
|
|
|
|
|
|
|
|
|
|
|
110.7
|
|
Receivable from related party
|
|
|
11.2
|
|
|
|
|
|
|
|
|
|
|
|
11.2
|
|
Prepaid expenses and other current assets
|
|
|
99.1
|
|
|
|
52.5
|
|
|
|
|
|
|
|
151.6
|
|
Deferred income taxes
|
|
|
62.3
|
|
|
|
33.8
|
|
|
|
|
|
|
|
96.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,136.0
|
|
|
|
908.8
|
|
|
|
(111.7
|
)
|
|
|
1,933.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
269.6
|
|
|
|
131.5
|
|
|
|
|
|
|
|
401.1
|
|
Goodwill
|
|
|
4,190.1
|
|
|
|
1,309.3
|
|
|
|
2,519.9
|
(b)
|
|
|
8,019.3
|
|
Intangible assets, net
|
|
|
893.1
|
|
|
|
252.7
|
|
|
|
377.5
|
(c)
|
|
|
1,523.3
|
|
Computer software, net
|
|
|
613.0
|
|
|
|
222.6
|
|
|
|
|
|
|
|
835.6
|
|
Deferred contract costs
|
|
|
237.2
|
|
|
|
43.7
|
|
|
|
(43.7
|
) (d)
|
|
|
237.2
|
|
Long-term note receivable from FNF
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
5.3
|
|
Other noncurrent assets
|
|
|
72.1
|
|
|
|
91.2
|
|
|
|
(41.6
|
) (e)(h)
|
|
|
121.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,416.4
|
|
|
$
|
2,959.8
|
|
|
$
|
2,700.4
|
|
|
$
|
13,076.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
395.1
|
|
|
$
|
221.3
|
|
|
|
|
|
|
$
|
616.4
|
|
Settlement payables
|
|
|
82.4
|
|
|
|
222.6
|
|
|
|
|
|
|
|
305.0
|
|
Current portion of long-term debt
|
|
|
132.8
|
|
|
|
17.5
|
|
|
|
|
|
|
|
150.3
|
|
Deferred revenues
|
|
|
192.5
|
|
|
|
140.3
|
|
|
$
|
(63.2
|
) (f)
|
|
|
269.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
802.8
|
|
|
|
601.7
|
|
|
|
(63.2
|
)
|
|
|
1,341.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenues
|
|
|
87.9
|
|
|
|
|
|
|
|
|
|
|
|
87.9
|
|
Deferred income taxes
|
|
|
326.6
|
|
|
|
141.6
|
|
|
|
145.5
|
(g)
|
|
|
613.7
|
|
Long-term debt, excluding current portion
|
|
|
2,327.7
|
|
|
|
1,715.0
|
|
|
|
(311.5
|
) (h)
|
|
|
3,731.2
|
|
Other long-term liabilities
|
|
|
147.5
|
|
|
|
78.4
|
|
|
|
|
|
|
|
225.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,692.5
|
|
|
|
2,536.7
|
|
|
|
(229.2
|
)
|
|
|
6,000.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
2.0
|
|
|
|
1.2
|
|
|
|
0.6
|
(i)
|
|
|
3.8
|
|
Treasury stock, at cost
|
|
|
(391.4
|
)
|
|
|
(0.7
|
)
|
|
|
0.7
|
(j)
|
|
|
(391.4
|
)
|
Additional paid-in capital
|
|
|
2,961.6
|
|
|
|
1,486.2
|
|
|
|
1,905.8
|
(k)
|
|
|
6,353.6
|
|
Retained earnings (deficit)
|
|
|
1,099.6
|
|
|
|
(983.3
|
)
|
|
|
926.6
|
(l)
|
|
|
1,042.9
|
|
Accumulated other comprehensive earnings
|
|
|
(111.5
|
)
|
|
|
(95.9
|
)
|
|
|
95.9
|
(j)
|
|
|
(111.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total FIS/Metavante stockholders equity
|
|
|
3,560.3
|
|
|
|
407.5
|
|
|
|
2,929.6
|
|
|
|
6,897.4
|
|
Noncontrolling interest
|
|
|
163.6
|
|
|
|
15.6
|
|
|
|
|
|
|
|
179.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
3,723.9
|
|
|
|
423.1
|
|
|
|
2,929.6
|
|
|
|
7,076.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
7,416.4
|
|
|
$
|
2,959.8
|
|
|
$
|
2,700.4
|
|
|
$
|
13,076.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the unaudited pro forma condensed
combined financial statements, which are an integral part of
these statements. The pro forma adjustments are explained in
Note 6. Pro Forma Adjustments beginning on
page [ ].
27
Unaudited
Pro Forma Condensed Combined Statement of Earnings
For the
Three Months Ended March 31, 2009
(In
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
FIS
|
|
|
Metavante
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Processing and services revenues
|
|
$
|
797.8
|
|
|
$
|
426.9
|
|
|
$
|
(18.3
|
) (f)(m)
|
|
$
|
1,206.4
|
|
Cost of revenues
|
|
|
594.3
|
|
|
|
280.3
|
|
|
|
16.9
|
(m)(n)(q)
|
|
|
891.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
203.5
|
|
|
|
146.6
|
|
|
|
(35.2
|
)
|
|
|
314.9
|
|
Selling, general and administrative expenses
|
|
|
99.0
|
|
|
|
57.1
|
|
|
|
(17.1
|
) (o)
|
|
|
139.0
|
|
Research and development costs
|
|
|
22.6
|
|
|
|
|
|
|
|
8.9
|
(q)
|
|
|
31.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
81.9
|
|
|
|
89.5
|
|
|
|
(27.0
|
)
|
|
|
144.4
|
|
Other income, (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income (expense), net
|
|
|
2.0
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
1.9
|
|
Interest expense
|
|
|
(32.0
|
)
|
|
|
(26.2
|
)
|
|
|
(2.0
|
) (h)
|
|
|
(60.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(30.0
|
)
|
|
|
(26.3
|
)
|
|
|
(2.0
|
)
|
|
|
(58.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes and
equity in earnings of unconsolidated entities
|
|
|
51.9
|
|
|
|
63.2
|
|
|
|
(29.0
|
)
|
|
|
86.1
|
|
Provision for income tax
|
|
|
17.9
|
|
|
|
23.5
|
|
|
|
(14.0
|
) (p)
|
|
|
27.4
|
|
Equity in earnings of unconsolidated entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations, net of tax
|
|
|
34.0
|
|
|
|
39.7
|
|
|
|
(15.0
|
)
|
|
|
58.7
|
|
Net loss attributable to noncontrolling interest
|
|
|
0.3
|
|
|
|
0.6
|
|
|
|
|
|
|
|
0.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations attributable to
FIS/Metavante
|
|
$
|
34.3
|
|
|
$
|
40.3
|
|
|
$
|
(15.0
|
)
|
|
$
|
59.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share basic from continuing
operations attributable to FIS/Metavante
|
|
$
|
0.18
|
|
|
$
|
0.34
|
|
|
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
190.0
|
|
|
|
119.4
|
|
|
|
58.8
|
(r)
|
|
|
368.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share diluted from continuing
operations attributable to FIS/Metavante
|
|
$
|
0.18
|
|
|
$
|
0.34
|
|
|
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted
|
|
|
191.6
|
|
|
|
119.8
|
|
|
|
69.7
|
(r)
|
|
|
381.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the unaudited pro forma condensed
combined financial statements, which are an integral part of
these statements. The pro forma adjustments are explained in
Note 6. Pro Forma Adjustments beginning on
page [ ].
28
Unaudited
Pro Forma Condensed Combined Statement of Earnings
For the
Year Ended December 31, 2008
(In
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
|
|
|
Pro Forma
|
|
|
|
FIS
|
|
|
Metavante
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Processing and services revenues
|
|
$
|
3,446.0
|
|
|
$
|
1,707.2
|
|
|
$
|
(81.1
|
) (f)(m)
|
|
$
|
5,072.1
|
|
Cost of revenues
|
|
|
2,636.9
|
|
|
|
1,118.5
|
|
|
|
50.0
|
(m)(n)(q)
|
|
|
3,805.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
809.1
|
|
|
|
588.7
|
|
|
|
(131.1
|
)
|
|
|
1,266.7
|
|
Selling, general and administrative expenses
|
|
|
389.4
|
|
|
|
251.1
|
|
|
|
(27.2
|
) (o)
|
|
|
613.3
|
|
Research and development costs
|
|
|
84.8
|
|
|
|
|
|
|
|
51.3
|
(q)
|
|
|
136.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
334.9
|
|
|
|
337.6
|
|
|
|
(155.2
|
)
|
|
|
517.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income (expense), net
|
|
|
7.8
|
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
6.9
|
|
Interest expense
|
|
|
(163.5
|
)
|
|
|
(106.0
|
)
|
|
|
(7.9
|
) (h)
|
|
|
(277.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
(155.7
|
)
|
|
|
(106.9
|
)
|
|
|
(7.9
|
)
|
|
|
(270.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from continuing operations before income taxes and
equity in earnings of unconsolidated entities
|
|
|
179.2
|
|
|
|
230.7
|
|
|
|
(163.1
|
)
|
|
|
246.8
|
|
Provision for income tax
|
|
|
57.6
|
|
|
|
83.3
|
|
|
|
(58.9
|
) (p)
|
|
|
82.0
|
|
Equity in earnings of unconsolidated entities
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations
|
|
|
121.4
|
|
|
|
147.4
|
|
|
|
(104.2
|
)
|
|
|
164.6
|
|
Net (earnings) loss attributable to noncontrolling interest
|
|
|
(4.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings from continuing operations attributable to
FIS/Metavante
|
|
$
|
116.7
|
|
|
$
|
147.4
|
|
|
$
|
(104.2
|
)
|
|
$
|
159.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share basic from continuing
operations attributable to FIS/Metavante
|
|
$
|
0.61
|
|
|
$
|
1.24
|
|
|
$
|
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
191.6
|
|
|
|
119.1
|
|
|
|
57.9
|
(r)
|
|
|
368.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share diluted from continuing
operations attributable to FIS/Metavante
|
|
$
|
0.61
|
|
|
$
|
1.23
|
|
|
$
|
|
|
|
$
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted
|
|
|
193.5
|
|
|
|
119.9
|
|
|
|
63.7
|
(r)
|
|
|
377.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes to the unaudited pro forma condensed
combined financial statements, which are an integral part of
these statements. The pro forma adjustments are explained in
Note 6. Pro Forma Adjustments beginning on
page [ ].
29
NOTES TO
THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
|
|
1.
|
Description
of Transaction
|
Merger
Agreement
On March 31, 2009, FIS and Metavante entered into the
merger agreement, pursuant to which Metavante will be merged
with and into a wholly owned subsidiary of FIS.
Subject to the terms and conditions of the merger agreement,
which has been approved by the boards of directors of both FIS
and Metavante, if the merger is completed, each share of
Metavante common stock will be converted into the right to
receive 1.35 (the Exchange Ratio) shares of FIS
common stock. In addition, as of the consummation of the merger,
outstanding Metavante stock options and other stock-based awards
(other than performance shares) will be converted into stock
options and other stock-based awards with respect to shares of
FIS common stock, with adjustments in the number of shares and
exercise price (in the case of stock options) to reflect the
Exchange Ratio. Each outstanding Metavante performance share
will be assumed by FIS and converted into the right to receive
restricted shares of FIS common stock (with adjustments to
reflect the Exchange Ratio) and an amount in cash.
The merger agreement contains certain termination rights for FIS
and Metavante, including the right, subject to certain
conditions, to terminate the merger agreement if the merger is
not completed by December 31, 2009. The merger agreement
further provides that, upon termination of the merger agreement
under specified circumstances (including a termination by either
party in order to enter into a definitive agreement with respect
to an alternative transaction that the board of directors of
such party has determined to be a superior proposal, subject to
compliance with certain conditions), either Metavante or FIS
would be required to pay the other party a termination fee of
$175 million.
Consummation of the merger is subject to certain customary
conditions, including, among others, the approval of the merger
by the shareholders of Metavante, the approval of the issuance
of FIS common stock in connection with the merger by the
shareholders of FIS, the receipt of required governmental and
regulatory approvals and expiration of applicable waiting
periods, the accuracy of the representations and warranties of
the other party (generally subject to a material adverse effect
standard), material compliance by the other party with its
obligations under the merger agreement, the delivery of tax
opinions as to the tax treatment of the merger, and the receipt
of certain tax opinions regarding the impact of the merger on
the tax treatment of certain past transactions. The merger is
expected to be completed during the third quarter of 2009.
Investment
Agreement
On March 31, 2009, FIS entered into an investment agreement
with THL and FNF, pursuant to which, subject to the terms and
conditions of the investment agreement, FIS will issue and sell
(a) to THL in a private placement 12,861,736 shares of
FIS common stock for an aggregate purchase price of
approximately $200 million and (b) to FNF in a private
placement 3,215,434 shares of FIS common stock for an
aggregate purchase price of approximately $50 million.
Pursuant to the terms of the investment agreement, FIS will pay
each of THL and FNF a transaction fee equal to 3% of their
respective investments. The effect of the investments has been
included in the pro forma condensed combined financial
information. (See entries (i), (k) and (r) in Note 6,
Pro Forma Adjustments).
The investment agreement contains (a) customary
representations and warranties of FIS, THL and FNF;
(b) covenants of FIS to conduct its businesses in the
ordinary course until the completion of the investments; and
(c) covenants of FIS not to take certain actions during
such period. Consummation of the investments is subject to
certain conditions, including, among others, approval of the
shareholders of FIS of the issuance of shares of common stock to
each of THL and FNF and the consummation of the merger.
Following the completion of the investments, pursuant to the
terms of the investment agreement and contingent upon THL
maintaining certain ownership levels in FIS common stock, THL
will have the right to designate one member to the
Companys board of directors. The investment agreement also
provides that
30
neither THL nor FNF may transfer the shares purchased in the
investments, subject to limited exceptions, for 180 days
after the closing, and after such time provides THL and FNF with
certain registration rights.
The unaudited pro forma condensed combined financial information
was prepared using the acquisition method of accounting and was
based on the historical financial statements of FIS and
Metavante. Certain reclassifications have been made to the
historical financial statements of Metavante to conform with
FIS presentation, primarily related to the presentation of
restricted funds, EFD processing receivables, unbilled revenues
and research and development costs.
In December 2007, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 160, Non-controlling
Interests in Consolidated Financial Statements an
amendment of ARB No. 51 (SFAS 160),
requiring non-controlling interests (sometimes called minority
interests) to be presented as a component of equity on the
balance sheet. SFAS 160 also requires that the amount of
net earnings and losses attributable to the parent and to the
non-controlling interests be clearly identified and presented on
the face of the Consolidated Statement of Earnings.
SFAS 160 requires expanded disclosures in the Consolidated
Financial Statements that identify and distinguish between the
interests of the parents owners and the interest of the
non-controlling owners of subsidiaries. Pursuant to the
transition provisions of the statement, FIS and Metavante
adopted SFAS 160 as of January 1, 2009. The
presentation and disclosure requirements have been applied
retrospectively for FIS for all periods presented in this
document. The effect of retrospective application was deemed
immaterial for Metavante and, therefore, has not been presented.
The acquisition method of accounting is based on SFAS
No. 141(R), Business Combinations,
(SFAS 141(R)) which FIS adopted on
January 1, 2009 and uses the fair value concepts defined in
SFAS No. 157, Fair Value Measurements,
(SFAS 157) which FIS has adopted as required.
The unaudited pro forma condensed combined financial information
was prepared using the acquisition method of accounting, under
these existing U.S. GAAP standards, which are subject to
change and interpretation.
SFAS 141(R) requires, among other things, that most assets
acquired and liabilities assumed be recognized at their fair
values as of the acquisition date. In addition, SFAS 141(R)
establishes that the consideration transferred be measured at
the closing date of the merger at the then-current market price;
this particular requirement will likely result in a per share
equity component that is different from the amount assumed in
these unaudited pro forma condensed combined financial
statements.
SFAS 157 defines the term fair value and sets
forth the valuation requirements for any asset or liability
measured at fair value, expands related disclosure requirements
and specifies a hierarchy of valuation techniques based on the
nature of the inputs used to develop the fair value measures.
Fair value is defined in SFAS 157 as the price that
would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants
at the measurement date. This is an exit price concept for
the valuation of the asset or liability. In addition, market
participants are assumed to be buyers and sellers in the
principal (or the most advantageous) market for the asset or
liability. Fair value measurements for an asset assume the
highest and best use by these market participants. As a result
of these standards, FIS may be required to record assets which
are not intended to be used or sold
and/or to
value assets at fair value measures that do not reflect
FIS intended use of those assets. Many of these fair value
measurements can be highly subjective and it is also possible
that others applying reasonable judgment to the same facts and
circumstances could develop and support a range of alternative
estimated amounts.
Under the acquisition method of accounting, the assets acquired
and liabilities assumed will be recorded as of the completion of
the merger, at their respective fair values and added to those
of FIS. Financial statements and reported results of operations
of FIS issued after completion of the merger will reflect these
values, but will not be retroactively restated to reflect the
historical financial position or results of operations of
Metavante.
31
Under SFAS 141(R), acquisition-related transaction costs
(i.e., advisory, legal, valuation, other professional
fees) and certain acquisition-related restructuring charges
impacting the target company are not included as a component of
consideration transferred but are accounted for as expenses in
the periods in which the costs are incurred. Total
acquisition-related transaction costs expected to be incurred by
FIS are estimated to be approximately $70 million and are
reflected in these unaudited pro forma condensed combined
financial statements as a reduction to cash and retained
earnings, net of the estimated tax effect of $13.3 million
at a statutory rate of 38.5% applied to deductible amounts.
Actual non-recurring transaction costs for the three months
ended March 31, 2009, have been eliminated in the Pro Forma
Condensed Combined Statements of Earnings (Note 6,
item (o)) as prescribed by Article 11 of
Regulation S-X. The unaudited pro forma condensed combined
financial statements do not reflect any acquisition-related
restructuring charges to be incurred in connection with the
merger but these charges are expected to be in the range of $85
to $100 million. These costs will be expensed as incurred.
In connection with the merger, the vesting of certain
stock-based awards granted under one of the existing FIS stock
award plans will accelerate under the change in control
provisions relating to those grants. The charge to compensation
expense that will be recorded upon the consummation of the
merger relating to those grants is approximately
$25.0 million if measured based on a July 1, 2009
closing date. This amount is included in the total estimated
restructuring charges indicated above.
Upon consummation of the merger, FIS will review
Metavantes accounting policies. As a result of that
review, it may become necessary to harmonize the combined
entitys financial statements to conform to those
accounting policies that are determined to be more appropriate
for the combined entity. The unaudited pro forma condensed
combined financial statements do not assume any differences in
accounting policies.
|
|
4.
|
Estimate
of Consideration Expected to be Transferred
|
The following is a preliminary estimate of consideration
expected to be transferred to effect the acquisition of
Metavante:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
|
|
|
Estimated
|
|
|
Form of
|
|
|
|
Calculation
|
|
|
Fair Value
|
|
|
Consideration
|
|
|
|
(In millions, except per share amounts)
|
|
|
Number of shares of Metavante common stock outstanding as of
March 31, 2009
|
|
|
120.1
|
|
|
|
|
|
|
|
|
|
Multiplied by an assumed FIS stock price of $19.00,
multiplied by the exchange ratio of 1.35 ($19.00 * 1.35)
|
|
$
|
25.65
|
|
|
$
|
3,079.9
|
|
|
|
FIS common stock
|
|
Number of shares of Metavante stock options vested as of
March 31, 2009 expected to be canceled and exchanged for
FIS options
|
|
|
7.9
|
|
|
|
|
|
|
|
|
|
Multiplied by exchange ratio of 1.35 multiplied by estimated
fair value of $6.72 ($6.72 * 1.35)
|
|
$
|
9.07
|
|
|
|
71.4
|
|
|
|
FIS stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimate of consideration expected to be transferred (a)
|
|
|
|
|
|
$
|
3,151.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The estimated consideration expected to be transferred reflected
in these unaudited pro forma condensed combined financial
statements does not purport to represent what the actual
consideration transferred will be when the merger is
consummated. In accordance with SFAS 141(R), the fair value of
equity securities issued as part of the consideration
transferred will be measured on the closing date of the merger
at the then-current market price. This requirement will likely
result in a per share equity component different from the $19.00
assumed in these unaudited pro forma condensed combined
financial statements and that difference may be material. For
example, a 10% change in the estimated consideration transferred
would be an increase or decrease of approximately
$315 million. FIS stock has traded within a range of
$19.00 plus or minus 10% since the announcement of the merger
agreement. |
32
|
|
5.
|
Estimate
of Assets to be Acquired and Liabilities to be Assumed
|
The following is a preliminary estimate of the assets to be
acquired and the liabilities to be assumed by FIS in the merger,
reconciled to the estimate of consideration expected to be
transferred:
|
|
|
|
|
|
|
(In millions)
|
|
|
Book value of net assets acquired at March 31, 2009
|
|
$
|
407.5
|
|
Adjusted for:
|
|
|
|
|
Elimination of existing goodwill, intangible assets and deferred
contract costs
|
|
|
(1,605.7
|
)
|
|
|
|
|
|
Adjusted book value of net assets acquired
|
|
$
|
(1,198.2
|
)
|
Adjustments to:
|
|
|
|
|
Identifiable intangible assets (I)
|
|
|
630.2
|
|
Other noncurrent assets
|
|
|
(51.6
|
)
|
Deferred revenues
|
|
|
63.2
|
|
Deferred income taxes (II)
|
|
|
(145.5
|
)
|
Long-term debt
|
|
|
24.0
|
|
Non-contractual contingencies (III)
|
|
|
|
|
Goodwill (IV)
|
|
|
3,829.2
|
|
|
|
|
|
|
Estimate of consideration expected to be transferred
|
|
$
|
3,151.3
|
|
|
|
|
|
|
|
|
|
(I) |
|
As of the effective time of the merger, identifiable intangible
assets are required to be measured at fair value and these
acquired assets could include assets that are not intended to be
used or sold or that are intended to be used in a manner other
than their highest and best use. For purposes of these unaudited
pro forma condensed combined financial statements, it is assumed
that all assets will be used and that all assets will be used in
a manner that represents the highest and best use of those
assets, but it is not assumed that any market participant
synergies will be achieved. The consideration of synergies has
been excluded because they are not considered to be factually
supportable, which is a required condition for these pro forma
adjustments. |
|
|
|
|
|
The fair value of identifiable intangible assets will be
determined using the income method, which starts
with a forecast of all the expected future net cash flows. At
this time, FIS does not have sufficient information as to the
amount, timing and risk of cash flows of intangible assets. For
purposes of these unaudited pro forma condensed combined
financial statements, intangible assets have been valued at 20%
of the total purchase price, which is consistent with the
historical experience of FIS in other acquisitions. |
|
|
|
(II) |
|
As of the effective date of the merger, FIS will provide
deferred taxes and other tax adjustments as part of the
accounting for the acquisition, primarily related to the
estimated fair value adjustments for acquired intangibles (see
Note 6. Pro Forma Adjustments, items (g) and (p)). |
|
|
|
(III) |
|
On April 1, 2009, the Financial Accounting Standards Board
(FASB) issued FASB Staff Position 141(R)-1,
Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies, to amend
the guidance in SFAS 141(R) to require that assets acquired
and liabilities assumed in a business combination that arise
from contingencies be recognized at fair value if fair value can
be reasonably estimated. If fair value of such an asset or
liability cannot be reasonably estimated, the asset or liability
would be recognized in accordance with SFAS No. 5,
Accounting for Contingencies, and FASB Interpretation
No. 14, Reasonable Estimation of the Amount of a
Loss. As disclosed in Metavantes March 31, 2009
Quarterly Report on Form 10-Q, which is incorporated by
reference into this joint proxy statement/prospectus,
During its normal course of business, Metavante may be
involved from time to time in litigation. Metavante recorded a
reserve in the amount of $8.5 million and $8.7 million
as of March 31, 2009 and December 31, 2008,
respectively, for the estimated exposure and legal fees related
to a contractual dispute with a customer. On June 3,
2009, Metavante prevailed at the trial court level on all counts
before the court related to such dispute. The case remains
subject to appeal, however no appeal has been filed to date. FIS
does not have sufficient information to evaluate this legal
contingency to value it under a fair value standard or to
estimate a range of outcomes. |
33
|
|
|
|
|
In addition, Metavante has recorded provisions for uncertain tax
positions. Income taxes are exceptions to both the recognition
and fair value measurement principles of SFAS 141(R); they
continue to be accounted for under the guidance of
SFAS No. 109, Accounting for Income Taxes, as
amended, and related interpretative guidance. |
|
(IV) |
|
Goodwill is calculated as the difference between the acquisition
date fair value of the consideration expected to be transferred
and the values assigned to the assets acquired and liabilities
assumed. Goodwill is not amortized. |
This note should be read in conjunction with other notes in the
unaudited pro forma condensed combined financial statements.
Adjustments included in the column under the heading Pro
Forma Adjustments represent the following:
(a) To record estimated transaction costs of
$70.0 million, net of the estimated tax effect of
$13.3 million based on FIS statutory rate of 38.35%
applied to deductible items, debt issue costs of
$10 million, and a reduction in cash of $45.0 million
to partially fund retirement of Metavante debt. Proceeds from
the investments are considered received and immediately
disbursed as another fund source for the Metavante debt
retirement.
(b) To adjust goodwill to an estimate of acquisition-date
goodwill, as follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante historical goodwill
|
|
$
|
(1,309.3
|
)
|
Estimated transaction goodwill
|
|
|
3,829.2
|
|
|
|
|
|
|
Total
|
|
$
|
2,519.9
|
|
|
|
|
|
|
(c) To adjust intangible assets to an estimate of fair
value, as follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante historical intangible assets
|
|
$
|
(252.7
|
)
|
Estimated fair value of intangible assets acquired
|
|
|
630.2
|
|
|
|
|
|
|
|
|
$
|
377.5
|
|
|
|
|
|
|
Intangibles are assumed to represent 20% of the total purchase
price, consistent with FIS history for other acquisitions.
(d) To eliminate Metavante deferred contract costs which
have no continuing benefit to the combined entity.
(e) To eliminate Metavante deferred customer inducements of
$19.0 million, which have no continuing benefit to the
combined entity.
(f) To reduce Metavantes deferred revenues to
estimated fair value, determined as fulfillment cost plus a
normal profit margin. Certain deferred revenues (e.g.,
license, conversion fees) are deferred for accounting purposes
but require minimal or no future incremental direct costs in
order to be recognized. In determining a normal profit margin,
we applied FIS historic profit margins to the estimated
costs of services to be delivered for the remaining deferred
revenue balances. The net effect is a 45% reduction to total
Metavante deferred revenues, or $63.2 million and
$71.2 million, as of March 31, 2009 and
December 31, 2008, respectively. Corresponding reductions
of $15.8 million for the quarter ended March 31, 2009
and $71.2 million for the year ended December 31, 2008
are reflected to revenue.
34
(g) To record the estimated impact on deferred income taxes
of fair value pro forma adjustments, as follows:
|
|
|
|
|
|
|
|
(in millions)
|
|
|
Intangible assets
|
|
$
|
377.5
|
|
|
Deferred contract costs
|
|
|
(43.7
|
)
|
|
Other noncurrent assets
|
|
|
(41.6
|
)
|
|
Deferred revenue
|
|
|
63.2
|
|
|
Long-term debt
|
|
|
24.0
|
|
|
|
|
|
|
|
|
|
|
$
|
379.4
|
|
|
FIS statutory tax rate
|
|
|
x38.35
|
%
|
|
|
|
|
|
|
|
|
|
$
|
145.5
|
|
|
|
|
|
|
|
|
(h) To record the net change in long-term debt as follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante deferred debt issue costs of
$32.6 million, net of new debt issue costs of
$10 million (Other noncurrent assets)
|
|
$
|
22.6
|
|
|
|
|
|
|
Reduce Metavante long-term debt to fair value based on current
market rate of 97%
|
|
$
|
(24.0
|
)
|
Repay a portion of Metavantes historical long-term debt
|
|
|
(932.5
|
)
|
New Term Loan B Accordian(1)
|
|
|
500.0
|
|
New Asset-Backed Facility(1)
|
|
|
145.0
|
|
|
|
|
|
|
|
|
$
|
(311.5
|
)
|
|
|
|
|
|
|
|
|
(1) |
|
FIS intends to finance the reduction in long-term debt through
execution of a $500 million accordion term loan at LIBOR
plus 425 basis points, a $145 million secured
borrowing facility collateralized by FIS accounts receivable at
LIBOR plus 325 basis points, proceeds from the Investments,
and available cash balances. FIS projects a net increase in pro
forma interest expense of $7.9 million per annum
($2.0 million per quarter). |
(i) To record the stock portion of the merger consideration
and the issuance of stock in connection with the investments, at
par, and to eliminate Metavantes common stock, at par, as
follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante common stock
|
|
$
|
(1.2
|
)
|
Issuance of FIS common stock relative to the investments
|
|
|
0.2
|
|
Issuance of FIS common stock relative to the merger
|
|
|
1.6
|
|
|
|
|
|
|
|
|
$
|
0.6
|
|
|
|
|
|
|
(j) To eliminate Metavantes treasury stock and
accumulated other comprehensive earnings.
(k) To record the stock portion of the merger consideration
and the issuance of stock in connection with the investments, at
fair value less par, to eliminate Metavante additional paid-in
capital, and to record unearned compensation relative to the
conversion of unvested stock options and other equity awards as
follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante additional paid in capital
|
|
$
|
(1,486.2
|
)
|
Issuance of FIS common stock relative to the investments, net of
3% transaction fee
|
|
|
242.3
|
|
Issuance of FIS common stock relative to the merger
|
|
|
3,192.4
|
|
Unearned compensation
|
|
|
(42.7
|
)
|
|
|
|
|
|
|
|
$
|
1,905.8
|
|
|
|
|
|
|
35
(l) To eliminate Metavantes retained deficit, and to
record estimated non-recurring costs of FIS for
acquisition-related transaction costs, as follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante retained deficit
|
|
$
|
983.3
|
|
Estimated $70 million acquisition-related transaction costs
assumed to be non-recurring, net of tax effect at statutory rate
of 38.35% applied to deductible items
|
|
|
(56.7
|
)
|
|
|
|
|
|
|
|
$
|
926.6
|
|
|
|
|
|
|
(m) To eliminate activity between FIS and Metavante
totaling $2.5 million for the three-months ended
March 31, 2009 and $9.9 million for the year ended
December 31, 2008, consisting principally of image and
card-processing services provided by Metavante to FIS.
(n) To record the following adjustments:
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
March 31, 2009
|
|
|
December 31, 2008
|
|
|
|
(In millions)
|
|
|
Estimated Metavante intangible asset amortization based on
estimated fair value (20% of pro forma fair value using the
accelerated,
pattern-of-benefit
amortization method)
|
|
$
|
31.5
|
|
|
$
|
124.9
|
|
Reverse amortization of Metavante deferred conversion costs
eliminated in purchase accounting
|
|
|
(3.2
|
)
|
|
|
(13.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
28.3
|
|
|
$
|
111.2
|
|
|
|
|
|
|
|
|
|
|
The assumed life for intangible assets is 10 years,
resulting in amortization for the first 5 years as follows:
|
|
|
|
|
|
|
(In millions)
|
|
|
Year 1
|
|
$
|
124.9
|
|
Year 2
|
|
|
99.9
|
|
Year 3
|
|
|
87.4
|
|
Year 4
|
|
|
74.9
|
|
Year 5
|
|
|
62.4
|
|
(o) To record the following adjustments:
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
March 31, 2009
|
|
|
December 31, 2008
|
|
|
|
(In millions)
|
|
|
Eliminate Metavante intangible asset amortization
|
|
$
|
(7.4
|
)
|
|
$
|
(29.7
|
)
|
Eliminate non-recurring transaction costs incurred, totaling
$2.2 million and $7.3 million for Metavante and FIS,
respectively
|
|
|
(9.5
|
)
|
|
|
|
|
Eliminate Metavante share-based compensation expense
|
|
|
(4.4
|
)
|
|
|
(15.6
|
)
|
Estimated amortization related to unvested Metavante stock
options
|
|
|
2.6
|
|
|
|
11.1
|
|
Estimated amortization related to unvested Metavante performance
shares
|
|
|
0.5
|
|
|
|
1.9
|
|
Estimated amortization related to unvested Metavante restricted
shares
|
|
|
1.1
|
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(17.1
|
)
|
|
$
|
(27.2
|
)
|
|
|
|
|
|
|
|
|
|
36
(p) To give tax effect to the pro forma revenue and expense
adjustments based on Metavantes effective tax rate of
37.2% for the three-month period ended March 31, 2009, and
36.1% for the year ended December 31, 2008. The tax effect
related to the non-recurring transaction costs reversed in
entry (o) was separately calculated at $0.3 million as
many of these costs were considered non-deductible.
(q) Reclassification of Metavante research and development
costs of $8.9 million for the three-month period ended
March 31, 2009, and $51.3 million for the year ended
December 31, 2008 to conform to FIS presentation.
(r) The adjustment to weighted average shares
outstanding basic is calculated as follows (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
March 31, 2009
|
|
|
December 31, 2008
|
|
|
Eliminate Metavante shares
|
|
|
(119.4
|
)
|
|
|
(119.1
|
)
|
Shares issued in merger
|
|
|
162.1
|
|
|
|
160.9
|
|
Shares issued in investments
|
|
|
16.1
|
|
|
|
16.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58.8
|
|
|
|
57.9
|
|
|
|
|
|
|
|
|
|
|
The adjustment to weighted average shares
outstanding diluted is calculated as follows (in
millions):
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
|
Ended
|
|
|
Year Ended
|
|
|
|
March 31, 2009
|
|
|
December 31, 2008
|
|
|
Eliminate Metavante shares
|
|
|
(119.8
|
)
|
|
|
(119.9
|
)
|
Shares issued in merger
|
|
|
162.1
|
|
|
|
160.9
|
|
Shares issued in investments
|
|
|
16.1
|
|
|
|
16.1
|
|
Dilutive effect of replacement options and share-based awards
|
|
|
11.3
|
|
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69.7
|
|
|
|
63.7
|
|
|
|
|
|
|
|
|
|
|
The unaudited pro forma condensed combined financial statements
do not present a combined dividend per share amount.
The unaudited pro forma combined basic and diluted earnings per
share for the periods presented are based on the combined basic
and diluted weighted-average shares outstanding. The historical
basic and diluted weighted average shares of Metavante were
assumed to be replaced by the shares expected to be issued by
FIS to effect the merger.
The unaudited pro forma condensed combined financial statements
do not reflect the anticipated realization of annual cost
savings of $260 million. These savings are expected to be
derived from infrastructure consolidation, overhead
redundancies, product portfolio rationalization and supplier
rationalization. Although FIS management expects that cost
savings will result from the merger, there can be no assurance
that these cost savings will be achieved. The unaudited pro
forma condensed combined financial statements do not reflect
estimated acquisition-related restructuring charges associated
with the expected cost savings, which could be in the range of
$35 to $50 million and which will be expensed as incurred.
37
FIS
PROPOSAL 1 AND METAVANTE PROPOSAL 1: THE
MERGER
Background
of the Merger
Management and the boards of directors of both FIS and Metavante
periodically review and consider potential strategic options for
their companies in light of business, market and economic trends
and developments. These discussions have included management
presentations concerning possible transactions, investments and
other business initiatives intended to create or enhance
shareholder value.
In mid-July 2008, Mr. Frank R. Martire, then President and
Chief Executive Officer of Metavante (now the Chairman and Chief
Executive Officer), called Mr. Lee A. Kennedy, the
President and Chief Executive Officer of FIS, and Messrs.
Martire and Kennedy discussed their respective companies,
industry trends and developments. At the conclusion of the call,
Messrs. Martire and Kennedy agreed to remain in contact with
respect to the foregoing. Thereafter, Mr. William P.
Foley, II, the Executive Chairman of the FIS board of
directors, Mr. Kennedy and Mr. Brent B. Bickett,
Executive Vice President, Strategic Planning of FIS, met with
Mr. Martire, Mr. Michael D. Hayford, then Senior
Executive Vice President (and now President) and Chief Operating
Officer of Metavante, and Mr. Donald W. Layden, Jr., Senior
Executive Vice President, General Counsel and Secretary of
Metavante, to discuss a possible business combination of FIS and
Metavante.
During the following weeks, management of Metavante and FIS had
several meetings to discuss the possibility of a potential
business combination of the two companies, including preliminary
discussions of issues relating to structure, value, governance
and the formation of a combined management team. In connection
with these discussions, in August 2008, Metavante asked Lehman
Brothers Inc. to assist it as its financial advisor in
connection with its analysis of the merits of a potential
business combination and FIS asked Goldman, Sachs & Co. and
Banc of America Securities to assist it as its financial
advisors, in each case in connection with its analysis of the
merits of a potential business combination and, in the event a
business combination were entered into, to provide an opinion
regarding the financial terms of such business combination to
the respective boards of directors. During this time, the board
of directors of each company received regular updates from their
respective management on the status of these discussions, and
also consulted with their financial and legal advisors.
In the second half of August and early September 2008, FIS and
Metavante agreed to share some preliminary due diligence
materials concerning the companies. In connection with this
process, the parties entered into a mutual confidentiality
agreement. During this time, the senior managements and
financial advisors of FIS and Metavante met to review
preliminary financial information regarding a potential
combination and several meetings of each companys board of
directors were held to keep the boards apprised of the status of
these preliminary discussions. Also during this time, FIS
communicated its initial views regarding indicative economic
terms for a potential transaction, then, following preliminary
discussions with Metavante, communicated an indication of
interest in acquiring Metavante for stock consideration per
share of $29. Based on the then current stock prices of
Metavante and FIS, this represented an implied exchange ratio of
approximately 1.37 shares of FIS common stock for each
share of Metavante common stock. FIS also spoke to
representatives of Warburg Pincus LLC concerning obtaining its
preliminary views on and potential support for a transaction and
its potential role on the board of directors of the combined
company. During the following weeks, FIS and Metavante and their
respective financial and legal advisors commenced preliminary
discussions regarding the potential terms and conditions of a
transaction and the various steps that would need to be taken
with each companys various constituencies in order for a
transaction to proceed on a satisfactory basis. The legal
advisors of each company and of Warburg Pincus LLC also
commenced preparation of initial drafts of documentation for the
potential transaction. During this process, each of FIS and
Metavante updated its board of directors regularly on the status
of their discussions.
While discussions between FIS and Metavante proceeded, in early
September 2008, Metavante received a written indication of
interest to enter into a strategic business combination from
another potential suitor, Company A, which preliminarily
proposed acquiring Metavante for mixed stock and cash
consideration per share of $29, with at least 50% of the
consideration being cash. Metavantes board of directors
discussed and
38
reviewed Company As indication of interest on several
occasions with Metavantes senior management and outside
advisors, and compared the terms of the indication of interest
from each of Company A and FIS. Metavantes management and
advisors also held several conversations with Company A and its
advisors regarding Company As indication of interest.
During these discussions, Metavante identified potential tax
issues with respect to Company A related to Metavantes
spin-off of M&I and the related tax allocation agreement
between Metavante and M&I, which issues included concern
that entering into a transaction with Company A might result in
the imposition of significant tax liabilities on Metavante in
respect of the spin-off, for which M&I would be severally
liable under applicable federal income tax regulations, and the
related concern that, under the tax allocation agreement,
M&I would not permit a transaction between Metavante and
Company A to proceed. After several discussions between
Metavante, Company A and M&I and their respective advisors,
Metavante believed that, taking into account these concerns, the
comparative value of the potential transaction with Company A
was not as favorable to Metavantes shareholders as the
potential transaction with FIS. Moreover, Metavante believed
that the tax issues would likely have an adverse impact on the
likelihood of successfully negotiating, financing and completing
a transaction with Company A at that time. As a result,
Metavante determined to discontinue discussions with Company A
and focus on the potential transaction with FIS. Metavante and
FIS then entered into an agreement providing for at least
30 days of exclusive negotiation.
In the second half of September 2008, in connection with the
Chapter 11 proceedings commenced by the parent entity of
Lehman Brothers, certain assets of Lehman Brothers, including
its North American investment banking franchise, were acquired
by Barclays Capital Inc. As a result, the individuals who had
been advising Metavante were subsequently hired by Barclays
Capital.
In late September and early October 2008, severe disruptions in
U.S. and global capital markets and in the economy led the
parties to suspend their discussions and terminate access to
their respective due diligence data rooms. After several weeks
of inactivity, Metavante terminated the exclusivity agreement
with FIS in early November 2008.
During the following weeks, Mr. Layden and Mr. Bickett
remained in periodic, informal contact regarding the state of
the credit market and the prospects for obtaining financing to
replace Metavantes existing debt. During this time, each
of FIS and Metavante believed that, under the then current
credit market conditions, there was not a viable option to
address the refinancing necessitated by the fact that a
potential transaction would require consent under the terms of
Metavantes existing debt and, accordingly, the parties
concluded that it did not make sense to discuss any other terms
of a potential transaction until such time as a viable financing
option existed. Metavante and FIS continued to work with
Barclays Capital, Goldman Sachs and Banc of America Securities
to monitor the credit markets and consider financing
alternatives, and in early December of 2008, FIS and Metavante
jointly retained J.P. Morgan Securities Inc. to act as
structuring agent to assist in this process, including by
communicating with the parties holding Metavantes existing
debt and to assist in negotiations for the modifications of the
terms of such debt to permit a potential transaction. Each
companys board of directors received regular updates from
management and their legal and financial advisors throughout
this time.
In early January 2009, Metavante and FIS determined that there
was a reasonable prospect of addressing the impact of a
potential transaction on Metavantes debt and decided that
it would make sense to again investigate the possible benefits
of a strategic combination of the two companies. In mid-January,
members of Metavantes management committee met with
members of FIS executive management team to discuss
synergy opportunities and a due diligence process.
Also in January 2009, Metavante and Company A and their
respective legal counsel had additional discussions regarding
the potential tax issues raised by a potential business
combination of the two companies, which discussions did not
resolve Metavantes concerns regarding the likelihood of
successfully negotiating, financing and completing a transaction
with Company A at that time.
In late January 2009, Mr. James Neary, a member of the
Metavante board of directors and a managing director of Warburg
Pincus LLC, and Mr. Richard N. Massey, a member of the FIS
board of directors, met at the direction of their respective
board of directors to discuss a potential business combination
and indicative
39
terms for such a transaction. At that time, Mr. Massey
suggested an exchange ratio of 1.16 shares of FIS common
stock for each share of Metavante common stock, subject to
satisfactory completion of due diligence, and a proposed
governance structure which included representation on the board
of directors of the combined company of four continuing
Metavante directors.
In early February 2009, the board of directors for each company
met independently on several occasions to receive updates
regarding the status of the transaction, including the proposed
change in the exchange ratio from 1.37 to 1.16, the recent stock
price movement of each company and the efforts led by
J.P. Morgan Securities to address the potential impact of a
transaction on Metavantes debt. In the course of its
meetings, Metavantes board of directors authorized
Mr. Neary to inform FIS that Metavante would be willing to
continue discussing a potential transaction involving an
exchange ratio of 1.25, which, based on the relative movements
in the trading price of the two companies stock in the
preceding few months, at that time represented approximately the
same implied premium to Metavante shareholders as the implied
premium represented by the 1.37 exchange ratio in September
2008. The FIS board of directors thereafter authorized
re-commencing discussions regarding a potential transaction on
this basis.
In mid-February 2009 through March 2009, FIS and Metavante
re-opened access to their respective due diligence data rooms
and continued detailed due diligence, and the parties conducted
management meetings. Also during this period, the parties and
their financial advisors continued efforts to address the terms
of Metavantes existing debt in the context of a business
combination. As a part of these efforts, the parties and
J.P. Morgan Securities initiated approaches to certain of
Metavantes lenders in order to obtain the required lender
consents to make appropriate modifications to Metavantes
debt terms, including a partial debt repayment and an increase
in interest rates, to accommodate a transaction. In connection
with this process, FIS, together with its financial advisors,
evaluated the anticipated capital structure of the combined
company taking into account current credit market conditions,
the objective of repaying approximately $300 million of
Metavante debt in connection with the consent process and
FIS near-term strategic objective of obtaining an
investment grade corporate credit rating, which rating would
facilitate a lower cost of financing for the combined company
and thereby improve prospective financial results and future
access to capital. On this basis, FIS determined that it would
be appropriate to raise $200 million to $300 million
in financing through the sale of common equity. FIS thereafter
contacted certain potentially interested investors, and
commenced confidential discussions with representatives of THL,
with whom they had had previous preliminary discussions, and FNF
regarding a potential equity investment in the combined company.
During this time, Metavante and FIS and their respective
advisors continued to discuss the terms and conditions of a
potential transaction, as well as the management structure of a
combined company and, in that connection, the terms of
employment for Mr. Martire and Mr. Hayford, who were
expected to be asked to serve as the Chief Executive Officer and
Chief Financial Officer, respectively, of FIS following
completion of a merger. FIS, Metavante, Warburg Pincus LLC and
their respective advisors also continued negotiation of the
terms of a voting support agreement with WPM, pursuant to which
WPM would agree to vote all of its shares of Metavante common
stock in support of the proposed merger, a shareholders
agreement, which would provide WPM with a right to designate one
member of the FIS board during the period that it continued to
maintain a requisite stock ownership level, and a stock purchase
right agreement, which would give WPM the right after the merger
to purchase shares of FIS common stock if certain Metavante
employee stock options assumed by FIS in the merger are
exercised. Each companys board of directors received
updates from management and its legal and financial advisors
during this time.
By late March, the share prices of FIS and Metavante had
diverged in a manner that reduced the implied premium to
Metavantes shareholders. On March 26, 2009,
Mr. Stephan A. James, Metavantes lead director,
called Mr. Massey and advised Mr. Massey that the
implied premium had deteriorated and that the 1.25 exchange
ratio was no longer acceptable to the board of directors of
Metavante. Mr. James proposed an exchange ratio of 1.35,
which, based on the then relative trading prices of the two
companies stock, represented approximately the same
implied premium represented by the 1.37 exchange ratio in
September 2008.
40
On March 27, 2009, the FIS board of directors held a
special meeting with senior management and its advisors.
Mr. Massey reviewed for the board the background of
discussions with Metavante and the progress of negotiations,
informing the FIS board of the communication from Mr. James
on the exchange ratio. Senior management of FIS reported on
FIS due diligence investigations of Metavante. Goldman
Sachs and Banc of America Securities then reviewed the structure
and other financial terms of the proposed merger, and financial
information regarding FIS, Metavante and the merger, as well as
information regarding selected peer companies and precedent
transactions. Senior management and representatives of FIS
legal advisor, Wachtell, Lipton, Rosen & Katz, then
discussed with the FIS board of directors the terms of the
proposed merger agreement, including the proposed composition of
the FIS board following the merger, as well as the progress of
negotiations and terms of the proposed agreements with WPM, THL
and FNF. FIS legal advisor then discussed with the FIS
board the legal standards applicable to its decisions and
actions with respect to the proposed transactions. Following
review and discussion among the members of the FIS board of
directors, the FIS board of directors authorized management and
its advisors to seek to finalize the merger agreement and
agreements with WPM, THL and FNF on the terms described to the
FIS board of directors at the meeting. Mr. Thomas M.
Hagerty, who is currently a member of the FIS board of directors
and who is expected to continue as a director of FIS following
the merger, is also a managing director of THL, and abstained
from voting on approval of proceeding with the THL investment.
FIS and FNF have three directors in common and a limited number
of shared employees and also have contractual and other
relationships with each other as described under FIS
Proposal 2 and Proposal 3: The Investments
Interests of Certain Persons in the Investments. It was
determined that the members of the FIS board of directors who
are not directors of, or otherwise affiliated with, FNF would
review any proposed investment by FNF and make a recommendation
regarding this investment to the full FIS board of directors.
The board of directors of FIS approved proceeding with the FNF
investment based upon the unanimous approval and recommendation
of such directors who are not directors of, or otherwise
affiliated with, FNF.
Following the FIS board meeting, Mr. Massey advised
Mr. James, and Mr. Foley advised Mr. Martire,
that FIS was unwilling to increase the exchange ratio from 1.25
based on the then-current transaction structure. After
additional discussion, Messrs. Massey and Foley indicated
that FIS may be willing to consider a revised proposal with a
1.35 exchange ratio if certain changes were to be made to the
deal structure, specifically with respect to the proposed board
composition of the combined company following a transaction, and
that the transitional and integration function (including with
respect to implementing and obtaining cost savings) would be led
by FIS management.
On March 29, 2009, the board of directors of Metavante held
a special meeting to discuss the revised proposal from FIS. At
the meeting, representatives of Kirkland & Ellis LLP
and Quarles & Brady LLP provided general legal advice
and Kirkland & Ellis reviewed the substantive
differences between the two proposals from FIS (specifically,
the 1.25 exchange ratio without the deal structure changes
listed in the last sentence of the preceding paragraph, and a
1.35 exchange ratio with such deal structure changes) and
discussed the boards fiduciary duties in considering these
proposals and other strategic alternatives, including
maintaining Metavante as a stand-alone entity. Barclays Capital
then discussed the financial terms of the two proposals, noting
that, based on the prices of the common stock of each company as
of March 27, 2009, the 1.35 exchange ratio would bring the
implied premium for Metavante shareholders back to approximately
the level afforded by the 1.37 exchange ratio in September 2008
and the level afforded by the 1.25 exchange ratio at the
beginning of February 2009. Members of the Metavante board then
discussed a number of topics with its advisors and management,
including Metavantes stand-alone plan and other strategic
alternatives, the ability of the combined company to execute on
its business plan, and certain due diligence matters relating to
FIS. The Metavante board adjourned the meeting for a couple of
hours, during which time Mr. Martire conveyed the
boards view, which favored the revised FIS proposal, to
FIS and engaged in additional discussions with Mr. Foley.
When the Metavante board reconvened, Mr. Martire informed
the board that FIS management would be willing to bring before
the FIS board a proposed business combination at a 1.35 exchange
ratio provided that three (instead of four) Metavante directors
would serve on the board of the combined company. As discussed
above, this higher 1.35 exchange ratio was determined as a
result of continued negotiations between FIS and Metavante, and
included the deal structure changes listed in the last sentence
of the preceding paragraph. After discussion and consultation
with its advisors, the Metavante board
41
authorized management to work towards finalizing the terms of
the transaction based on the revised proposal from FIS.
Over the course of the next day, management of FIS and Metavante
and representatives of WPM and their respective advisors
continued to negotiate terms of a proposed merger and related
transaction documents. During this time, management of FIS and
its legal advisor worked with THL and FNF to finalize the terms
of the proposed equity investments, which included THLs
right to designate one member of the FIS board subject to
maintaining a requisite stock ownership level. Following these
discussions, THL and FNF confirmed that they would be willing to
invest an aggregate of $200 million to $300 million in
the combined entity in connection with the merger. In light of
the anticipated capital structure of FIS following the
completion of a merger with Metavante, and in the context of the
ongoing process of negotiating appropriate modifications to the
terms of Metavantes existing debt, FIS determined that it
would seek an equity investment of $250 million. Subsequent
negotiations led to the final agreement whereby THL and FNF
would agree to purchase $200 million and $50 million,
respectively, of FIS common stock on the same financial terms
and conditions.
On March 30, 2009, the board of directors of FIS held a
special meeting with members of FIS senior management and
its legal and financial advisors for the purpose of updating the
board on continuing discussions since the March 27 meeting.
Mr. Foley reviewed with the FIS board the status of
negotiations with Metavante, including discussions between the
parties regarding the recent market trading trends in the
companies stocks and the appropriate exchange ratio in the
merger. Mr. Foley then explained that, as a result of these
discussions with Metavantes representatives, FIS
management was proposing an exchange ratio of 1.35 shares
of FIS common stock per share of Metavante common stock and a
combined company board composed of six continuing FIS directors
(which would include Mr. Hagerty, who is affiliated with
THL) and three continuing Metavante directors (which would
include one individual designated by WPM). The FIS board then
discussed with management and its advisors the terms of the
merger agreement and related agreements and the advisability of
the proposed transactions. Goldman Sachs updated its financial
analyses from the prior FIS board meeting and orally advised the
FIS board of directors that it would be prepared to render a
written opinion (which was subsequently delivered) to the effect
that, as of the date of their opinion, and subject to and based
on the qualifications and assumptions set forth in its opinion,
the proposed exchange ratio of 1.35 shares of FIS common
stock to be issued in exchange for each share of Metavante
common stock to be paid by FIS pursuant to the merger agreement
was fair, from a financial point of view, to FIS. Banc of
America Securities reviewed its financial analyses of the
exchange ratio of 1.35 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock to
be paid by FIS pursuant to the merger agreement and orally
advised the FIS board of directors that it would be prepared to
render a written opinion (which was subsequently delivered) to
the effect that, as of the date of its opinion, and subject to
and based on the qualifications and assumptions set for in its
opinion, the proposed exchange ratio of 1.35 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock to be paid by FIS pursuant to the merger
agreement was fair, from a financial point of view, to FIS.
Members of management then updated the FIS board on the final
negotiated terms of the investment agreement. Following further
discussion and review, including consideration of the factors
described under FIS Reasons for the
Merger and the Investments; Recommendations of the FIS Board of
Directors, the FIS board of directors then determined that
the transactions contemplated by each of the merger agreement
and the investment agreement were fair to, advisable for, and in
the best interests of FIS and its shareholders, and approved
finalizing the agreements on substantially the terms discussed
at the meeting.
In the morning of March 31, 2009, the board of directors of
Metavante met again with senior management and their legal and
financial advisors. Kirkland & Ellis addressed certain
related matters and reviewed the terms of the merger agreement
and other transaction documents, including the agreements
involving WPM and the investment agreement. Barclays Capital
reviewed with the Metavante board of directors the structure and
other terms of the proposed transaction (taking into
consideration the proposed equity capital investment). In
connection with the deliberation by the Metavante board of
directors, Barclays Capital rendered to the Metavante board of
directors its oral opinion (subsequently confirmed in writing),
as described under Opinion of Metavantes
Financial Advisor, that, based upon the qualifications,
limitations and assumptions set forth in its opinion, as of the
date of its opinion, from a financial point of view, the
42
exchange ratio of 1.35 shares of FIS common stock for each
share of Metavante common stock to be offered to the
shareholders of Metavante in the proposed transaction was fair
to such shareholders. Metavante management then updated the
board on the status of the lender consent solicitation process
and informed the board that the management team expected to
obtain consents from a requisite number of lenders within the
next 24 hours to waive the change of control provision in
the credit agreement so as to permit a transaction with FIS.
Following these discussions, and discussions among the members
of the Metavante board of directors, management and
Metavantes advisors, including consideration of the
factors described under Metavantes
Reasons for the Merger; Recommendation of the Metavante Board of
Directors, the Metavante board of directors unanimously
determined that the transactions contemplated by the merger
agreement and the related transactions and agreements are fair
to, advisable for, and in the best interests of Metavante and
its shareholders, and, subject to obtaining the requisite lender
consents necessary to permit the occurrence of a change of
control under Metavantes debt documents, voted unanimously
to approve and adopt the merger agreement and the transactions
it contemplates and to approve and adopt the related
transactions and agreements.
Following the approval of each companys board of
directors, the parties executed the merger agreement and
transaction documentation with WPM, THL and FNF after the market
closed on March 31, 2009. Prior to the opening of the
financial markets in New York City on April 1, 2009, the
transactions contemplated by the merger agreement and the
investment agreement were announced in a joint press release by
FIS and Metavante.
FIS
Reasons for the Merger and the Investments; Recommendation of
the FIS Board of Directors
The FIS board of directors consulted with FIS management as well
as legal and financial advisors and determined that the merger
and the investments are in the best interests of FIS and FIS
shareholders.
In reaching its conclusion to approve the merger agreement, the
FIS board considered a number of factors, including the
following material factors that the FIS board of directors
viewed as generally supporting its decision to approve the
merger agreement:
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its knowledge of the current and prospective environment in
which FIS and Metavante operate, including economic and market
conditions;
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its assessment of Metavantes businesses, prospects,
operations, earnings generation ability and financial condition
and its view of the attractive growth characteristics of
Metavantes existing markets and businesses;
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the review by the FIS board with management and its advisors of
the structure of the merger and the financial and other terms of
the merger, including the exchange ratio;
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its view of the value inherent in Metavantes banking and
payments technology businesses;
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the strength of the management team to be drawn from both
Metavante and FIS that will manage the combined company;
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its view that the combined company will be positioned to provide
a comprehensive range of integrated products and services to its
customers, and will have greater geographic reach than any other
provider in the industry, which will enhance service to the
combined companys customers and communities and provide
greater opportunities for its employees;
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the unique opportunity presented by the chance to acquire a
company of Metavantes quality, size and scope, its
assessment of the pro forma capital position, financial
condition and results of operations of the combined company, and
the expectation that the transaction will be accretive to
FIS adjusted earnings per common share in 2010;
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the potential expense saving opportunities, currently estimated
by FIS management to be approximately $260 million
when fully realized;
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the likelihood that the regulatory and shareholder approvals
needed to complete the transaction will be obtained in a timely
manner and that the regulatory approvals will be obtained
without the imposition of materially burdensome conditions;
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the historical and current market prices of FIS common stock and
Metavante common stock, as well as the financial analyses
prepared by Banc of America Securities and Goldman Sachs;
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the opinion delivered to the FIS board of directors by Goldman
Sachs to the effect that, as of the date of its opinion, and
subject to and based on the qualifications and assumptions set
forth in its opinion, the proposed exchange ratio to be paid by
FIS in the merger was fair, from a financial point of view, to
FIS, as more fully described below in the section entitled
Opinion of Goldman Sachs;
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the opinion of Banc of America Securities, dated March 31,
2009, to the FIS board of directors as to the fairness, from a
financial point of view and as of the date of the opinion, of
the exchange ratio of 1.350 shares of FIS common stock to
be issued in exchange for each share of Metavante common stock
provided for in the merger, as more fully described below in the
section entitled Opinion of Banc of America
Securities;
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FIS track record of integrating acquisitions and its
understanding of the opportunities and risks presented by an
acquisition of a company with the size and other characteristics
of Metavante.
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In addition, in reaching its conclusion to approve the
investment agreement and the investments, the FIS board
considered a number of factors, including the following material
factors that the FIS board of directors viewed as generally
supporting its decision to approve the investments and the
investment agreement:
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the capital structure of FIS following the completion of the
proposed merger and the proposed investments, and the
significance of the proposed investments in the context of the
discussions with Metavantes lenders regarding
modifications to the terms of Metavantes existing debt in
connection with the merger;
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the review by the FIS board with management of the financial and
other terms of the investment agreement, including the pricing
terms thereof which were set at a discount to the then-current
market price of a share of FIS common stock, and the views of
management and FIS outside financial advisors regarding
the then-current state of the U.S. equity markets generally;
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the fact that the investment agreement has representations and
warranties and conditions which are substantially aligned with
those included in the merger agreement, and the likelihood of
satisfying such conditions; and
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the fact that certain directors and executive officers of FIS
have interests in the investments as described under FIS
Proposal 2 and Proposal 3: The Investments
Interests of Certain Persons in the Investments. In
considering whether to accept an investment from FNF, the FIS
board considered these interests as well as other relevant facts
and circumstances, including the fact that FNFs investment
is subject to the same financial terms as those FIS was able to
negotiate with THL, the fact that in approving the FNF
investment the FIS board proceeded upon the recommendation of
FIS directors that are not affiliated with FNF, the facts and
circumstances surrounding the investments (including the timing
and significant complexity of the negotiations with Metavante
and others with respect to accomplishing numerous steps required
for FIS and Metavante to proceed with entering into the merger
agreement) and the fact that completion of the investments is
subject to the prior approval of FIS shareholders.
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The FIS board also considered potentially adverse factors and
risks in reaching its conclusion to approve the investment
agreement and investments, including that the issuance of shares
of FIS common stock in the investments will be dilutive to
existing FIS shareholders at the time the investments are
completed.
The FIS board of directors considered all of these factors as a
whole and, on balance, concluded that they supported a favorable
determination to enter into the merger agreement and the
investment agreement.
44
The foregoing discussion of the information and factors
considered by the FIS board of directors is not exhaustive, but
includes the material factors considered by the FIS board of
directors. In view of the wide variety of factors considered by
the FIS board of directors in connection with its evaluation of
the merger and the investments and the complexity of these
matters, the FIS board of directors did not consider it
practical to, nor did it attempt to, quantify, rank or otherwise
assign relative weights to the specific factors that it
considered in reaching its decision. The FIS board of directors
evaluated the factors described above and reached a consensus
that the merger and the investments were advisable and in the
best interests of FIS and its shareholders. In considering the
factors described above, individual members of the FIS board of
directors may have given different weights to different factors.
The FIS board of directors determined that the merger, the
merger agreement, the investment agreement and the transactions
contemplated by such agreements are advisable and in the best
interests of FIS and its shareholders, and unanimously
recommends that the FIS shareholders vote FOR the
proposal to issue shares of FIS common stock in the merger and
FOR the proposals to issue shares of FIS common
stock to the equity capital investors.
Metavantes
Reasons for the Merger; Recommendation of the Metavante Board of
Directors
In evaluating the merger, the Metavante board of directors
consulted with Metavantes management, as well as with
Metavantes financial and legal advisors. In reaching its
conclusion to approve and adopt the merger agreement and the
transactions it contemplates, the Metavante board of directors
considered a variety of factors including the following that the
Metavante board of directors viewed as generally supporting its
decision to approve the merger agreement and the transactions it
contemplates:
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The merger brings together two companies with complementary
operations and capabilities, which will provide the combined
company with the increased scale, strong financial base and
diversified services portfolio necessary to increase shareholder
value, enhance value to the customers and increase cost
efficiencies. Specifically, it is anticipated that the merger
will allow the combined company to:
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offer a comprehensive range of products and services across all
major segments, creating a leading
end-to-end
provider of core, payment and processing services;
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diversify and expand its customer base and end markets, allowing
for greater product integration and cross-selling opportunities;
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create the scale and scope necessary to compete in an evolving
and consolidating competitive landscape;
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diversify its geographic presence, particularly in some key
international markets; and
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enhance long-term organic revenue growth rates.
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The strategic alternatives reasonably available to Metavante,
including alternative acquisition candidates, remaining a
stand-alone entity and pursuing acquisitions of strategic
assets, and the determination of the Metavante board of
directors that a merger with FIS is a strategic combination
which will accelerate Metavantes ability to achieve its
strategic objectives and improve long-term value for
Metavantes shareholders.
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The expected cost synergies from the merger and the belief of
the Metavante board of directors that these synergies can be
realized by the anticipated management team of the combined
company.
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The increased global scale and anticipated costs savings, which
are expected to generate significant margin expansion.
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Metavantes due diligence review of FIS, and the current
and historic financial condition, results of operations,
prospects and risks of each of Metavante, FIS and the combined
company.
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The financial projections of the combined company and the risks
associated with the combined companys ability to meet such
projections.
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45
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The expectation that the merger would allow the combined company
to generate significant cash flows.
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The fact that the requisite Metavante lenders had irrevocably
agreed to waive the change of control provisions contained in
Metavantes debt documents and permit the merger to proceed
prior to the signing of the merger agreement.
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The fact that Metavantes shareholders will own
approximately 43.7% of the combined company on a fully diluted
basis immediately after the effective time of the merger,
assuming completion of the equity capital investments by THL and
FNF.
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The stock consideration will allow Metavante shareholders to
participate in all of the benefits of a significantly larger and
more diversified company, including future growth and expected
synergies of the combined company.
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The opportunity for Metavante shareholders to benefit from any
increase in the trading price of FIS common stock between
announcement of the merger and closing of the merger based on
the fixed exchange ratio of 1.35 shares of FIS common stock
for each share of Metavante common stock.
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The fact that the per share value implied by the fixed exchange
ratio of 1.35 represented:
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a 23.9% premium over the implied exchange ratio of Metavante
common stock to FIS common stock of 1.0898x on March 30,
2009, the last trading day prior to approving the proposed
transaction with FIS;
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a 28.5% premium over the average implied exchange ratio of
Metavante common stock to FIS common stock of 1.0503x over the
last 30 calendar days prior to approving the proposed
transaction with FIS;
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a 37.6% premium over the average implied exchange ratio of
Metavante common stock to FIS common stock of 0.9808x over the
last 90 calendar days prior to approving the proposed
transaction with FIS; and
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a 36.9% premium over the average implied exchange ratio of
Metavante common stock to FIS common stock of 0.9861x over the
last 180 calendar days prior to approving the proposed
transaction with FIS.
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The historical and current market prices of FIS common stock and
Metavante common stock, as well as comparative valuation
analyses for the two companies.
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The belief that the stock price trading multiple for the
combined company could be higher than the prevailing multiples
of either Metavante or FIS prior to their entry into the merger
agreement.
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The oral opinion of Barclays Capital, which opinion was
confirmed by delivery of a written opinion, dated as of
March 31, 2009, that as of the date of the opinion, and
based upon and subject to the qualifications, limitations and
assumptions set forth in the written opinion, from a financial
point of view, the exchange ratio to be offered to the
shareholders of Metavante in the merger was fair to such
shareholders, as more fully described below under the caption
Opinion of Metavantes Financial
Advisor beginning on page [ ].
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The fact that the board of directors of the combined company
will include three (out of nine) designees from the Metavante
board of directors, and a Metavante designee will be included in
each committee of the combined companys board of directors.
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The strong management team to be drawn from both Metavante and
FIS that will manage the combined company, including the fact
that Mr. Martire will be the Chief Executive Officer and
that Michael D. Hayford will be the Chief Financial
Officer of the combined company, and the demonstrated ability of
both management teams to integrate and obtain benefits from
previous business combinations and transactions.
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The expectation that the merger can be completed as a
reorganization for United States federal income tax purposes
and, as a result, the exchange by Metavante shareholders of
their shares of Metavante
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46
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common stock for shares of FIS common stock in the merger will
generally be tax-free to Metavante shareholders.
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The limited number and nature of the conditions to each
partys obligation to consummate the merger (including the
lack of a condition related to financing).
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The likelihood that the regulatory and shareholder approvals
needed to complete the transaction will be obtained in a timely
manner and that the regulatory approvals will be obtained
without the imposition of materially burdensome conditions.
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The provisions of the merger agreement that allow
Metavantes board of directors, under certain limited
circumstances, to change its recommendation that
Metavantes shareholders vote in favor of the approval of
the merger agreement and to furnish information to and
participate in discussions or negotiations with third parties
who have made unsolicited acquisition proposals, and that
provide Metavantes board of directors with the ability to
terminate the merger agreement in order to accept a superior
proposal (subject to compliance with certain conditions and the
payment of a $175 million termination fee).
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The fact that the representations, warranties and covenants of
Metavante and FIS are, subject to very limited exceptions,
reciprocal.
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The retention and employee benefit arrangements provided for in
connection with the merger agreement, including the preservation
for a period of time of certain historic benefits that Metavante
has provided to its employees.
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The fact that WPM, Metavantes largest shareholder, was
willing to enter into a support agreement and agree to vote for
the merger transaction.
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The restrictions and obligations imposed on Metavante by the
terms of the tax allocation agreement, between Metavante and
M&I, and the consent to the merger agreement provided by
M&I in connection therewith.
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The current and prospective business environment in which
Metavante operates, which reflects the challenging and uncertain
conditions facing financial institutions and other businesses
worldwide.
|
The Metavante board of directors also considered potentially
adverse factors and risks in reaching its conclusion, including:
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The interests of Metavantes directors and executive
officers in the merger (see Interests of
Certain Persons in the Merger beginning on
page ).
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The fact that the WPM support agreement may have the effect of
discouraging third parties from making business combination
proposals.
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The risks described under the caption Risk Factors
beginning on page [ ].
|
The foregoing discussion of the information and factors
considered by the Metavante board of directors is not intended
to be exhaustive but, we believe, includes all material factors
considered by the Metavante board of directors. In view of the
wide variety of factors considered and the complexity of these
matters, the Metavante board of directors did not assign
relative weights to the above factors or the other factors
considered by it. In addition, the Metavante board of directors
did not reach any specific conclusion on each factor considered,
but conducted an overall analysis of these factors. Individual
members of the Metavante board of directors may have given
different weights to different factors.
Based on the factors outlined above, the Metavante board of
directors determined that the merger agreement and the
transactions it contemplates, including the merger, are
advisable, fair to, and in the best interests of,
Metavantes shareholders. The board of directors of
Metavante unanimously recommends that Metavantes
shareholders vote FOR the approval and adoption of
the merger agreement and the transactions it contemplates.
47
Opinions
of FIS Financial Advisors
Opinion
of Goldman Sachs
Goldman Sachs delivered its opinion to the FIS board of
directors that, as of the date of the written fairness opinion,
and based upon and subject to the factors and assumptions set
forth therein, the exchange ratio of 1.350 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock pursuant to the merger agreement was fair
from a financial point of view to FIS.
The full text of the written opinion of Goldman Sachs, dated
March 31, 2009, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Appendix C. Goldman Sachs provided its opinion for the
information and assistance of the FIS board of directors in
connection with its consideration of the merger. The Goldman
Sachs opinion is not a recommendation as to how any holder of
shares of FIS common stock should vote with respect to such
merger or any other matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
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the merger agreement;
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annual reports to shareholders and Annual Reports on
Form 10-K
of FIS for the three fiscal years ended December 31, 2008;
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Annual Reports on
Form 10-K
of Metavante for the two fiscal years ended December 31,
2008;
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the Registration Statement on
Form S-4
for Metavante, filed on September 12, 2007;
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certain interim reports to shareholders and Quarterly Reports on
Form 10-Q
of FIS and Metavante;
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certain other communications from FIS and Metavante to their
respective shareholders;
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certain publicly available research analyst reports for FIS and
Metavante;
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certain internal financial analyses and forecasts for Metavante
prepared by its management; and
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certain internal financial analyses and forecasts for FIS
prepared by its management and certain financial analyses and
forecasts for Metavante prepared by the management of FIS, in
each case as approved for Goldman Sachs use by FIS
(management estimates), giving effect to the equity
capital investment, the refinancing (the
refinancing) of the indebtedness outstanding under
Metavantes credit facility and term loan dated
November 1, 2007 (the Metavante loans), and
certain revenue and cost synergies projected by the managements
of FIS and Metavante to result from the merger (the
transaction synergies).
|
Goldman Sachs also held discussions with members of the senior
managements of FIS and Metavante regarding their assessment of
the past and current business operations, financial condition
and future prospects of Metavante and with the members of the
senior management of FIS regarding their assessment of the past
and current business operations, financial condition and future
prospects of FIS and the strategic rationale for, and the
potential benefits of, the merger. In addition, Goldman Sachs
reviewed the reported price and trading activity for the shares
of FIS common stock and the shares of Metavante common stock,
compared certain financial and stock market information for FIS
and Metavante with similar information for certain other
companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in
the transaction processing industry specifically and in other
industries generally and performed such other studies and
analyses, and considered such other factors, as it considered
appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it. In that regard, Goldman Sachs assumed with
FIS consent that the management estimates and transaction
synergies have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the
48
management of FIS, and that they will be realized. In addition,
Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities (including any
contingent, derivative or off-balance-sheet assets and
liabilities) of FIS or Metavante or any of their respective
subsidiaries, nor was any evaluation or appraisal of the assets
or liabilities of FIS or Metavante or any of their respective
subsidiaries furnished to Goldman Sachs. Goldman Sachs assumed,
at FIS direction, that the refinancing will occur, and the
equity capital investment will be made, in accordance with their
respective terms, without waiver, modification or amendment of
any term, condition or agreement that will have any adverse
effect on FIS or Metavante or on the expected benefits of the
merger in any way meaningful to their analysis. Further, Goldman
Sachs assumed, at FIS direction, that the spin-off of each
of (x) M&I from Metavante on November 1, 2007,
and (y) LPS from FIS on July 2, 2008, qualified and at
all times will continue to qualify as a distribution eligible
for tax-free treatment under Sections 355 and 361(c) of the
Code, after application of Sections 355(d) and 355(e) of
the Code and that the related asset contributions and debt
exchanges qualify and at all times will continue to qualify as
reorganizations eligible for tax-free treatment under
Section 368 of the Code. Goldman Sachs assumed that all
governmental, regulatory or other consents and approvals
necessary for the completion of the merger will be obtained
without any adverse effect on FIS or Metavante or on the
expected benefits of the merger in any way meaningful to their
analysis. FIS informed Goldman Sachs that the lenders under the
Metavante loans have consented to the refinancing on the terms
reflected in the management estimates and as FIS had previously
indicated to Goldman Sachs. Goldman Sachs opinion does not
address any legal, regulatory, tax or accounting matters nor
does it address the underlying business decision of FIS to
engage in the merger or the relative merits of the merger as
compared to any strategic alternatives that may be available to
FIS. Goldman Sachs opinion addresses only the fairness
from a financial point of view to FIS, as of the date of the
written opinion and based upon and subject to the factors and
assumptions set forth therein, of the exchange ratio of
1.350 shares of FIS common stock per share of Metavante
common stock to be paid by FIS pursuant to the merger agreement.
Goldman Sachs opinion does not express any view on, and
does not address, any other term or aspect of the merger
agreement or merger, including, without limitation, the fairness
of the merger to, or any consideration received in connection
therewith by, the holders of any class of securities, creditors,
or other constituencies of FIS or Metavante; nor as to the
fairness of the amount or nature of any compensation to be paid
or payable to any of the officers, directors or employees of FIS
or Metavante, or class of such persons in connection with the
merger, whether relative to the exchange ratio of
1.350 shares of FIS common per share of Metavante common
stock to be paid by FIS pursuant to the merger agreement or
otherwise. Goldman Sachs noted that FIS has entered into the
investment agreement, pursuant to which THL and FNF have agreed
to purchase shares of FIS common stock in connection with, and
contingent upon the completion of, the merger. Goldman Sachs did
not express any view on, and its opinion did not address any
term or aspect of the equity capital investment pursuant to the
investment agreement or the refinancing. Goldman Sachs
opinion was necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made
available to it as of, the date of the opinion and Goldman Sachs
assumed no responsibility for updating, revising or reaffirming
its opinion based on circumstances, developments or events
occurring after the date of its opinion. In addition, Goldman
Sachs does not express any opinion as to the prices at which
shares of FIS common stock will trade at any time. Goldman
Sachs opinion was approved by a fairness committee of
Goldman Sachs.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to the FIS board of directors in
connection with rendering the opinion described above. The
following summary, however, does not purport to be a complete
description of the financial analyses performed by Goldman
Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman
Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a
complete description of Goldman Sachs financial analyses.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed on or before March 31,
2009, and is not necessarily indicative of current market
conditions.
Transaction Premium Analysis. Based on the
closing price of FIS common stock on March 31, 2009, the
last trading day prior to announcement of the merger, and the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock
pursuant to the merger
49
agreement, Goldman Sachs calculated the implied transaction
price to be received for each share of Metavante common stock in
the merger. Goldman Sachs then calculated the premium of this
implied transaction price relative to the following historical
trading prices for the Metavante common stock: (i) the
closing price on March 31, 2009; (ii) the average
closing prices for the prior 30-day, prior 90-day and prior
180-day periods ended March 31, 2009; (iii) the
average closing price from October 29, 2007, the first date
that Metavante traded as a separate company, to March 31,
2009; and (iv) the high closing price for the 52-week
period ended March 31, 2009. Goldman Sachs also calculated
the premium of the closing price of Metavante common stock on
March 31, 2009, relative to such prices and also compared
the premium for each period to the median premium for such
periods of selected all-stock transactions over the last
5 years with enterprise values between $1 billion and
$5 billion.
The following table presents the results of this analysis:
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Premium/(Discount) of
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|
Metavante
|
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|
Closing Price of
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Premium/(Discount) of
|
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|
100% Stock
|
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|
Price Per
|
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|
Metavante on March 31,
|
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|
Implied Transaction
|
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|
Transactions, Last 5
|
|
Time Period
|
|
Share
|
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|
2009
|
|
|
Price of $24.57
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|
Years*
|
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|
March 31, 2009
|
|
$
|
19.96
|
|
|
|
0.0
|
%
|
|
|
23.1
|
%
|
|
|
18.3
|
%
|
Prior 30 day period
|
|
$
|
17.75
|
|
|
|
12.5
|
%
|
|
|
38.4
|
%
|
|
|
19.4
|
%
|
Prior 90 day period
|
|
$
|
16.52
|
|
|
|
20.8
|
%
|
|
|
48.7
|
%
|
|
|
23.0
|
%
|
Prior 180 day period
|
|
$
|
18.11
|
|
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|
10.2
|
%
|
|
|
35.6
|
%
|
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|
26.7
|
%
|
Since October 29, 2007
|
|
$
|
20.34
|
|
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|
(1.9
|
)%
|
|
|
20.8
|
%
|
|
|
NM
|
|
52 week high
|
|
$
|
26.23
|
|
|
|
(23.9
|
)%
|
|
|
(6.3
|
)%
|
|
|
36.0
|
%
|
|
|
|
* |
|
Source: Thomson Financial, excluding selected distressed or
buy-in- transactions. US public company targets only. |
Implied Transaction Multiples. Goldman Sachs
calculated an implied equity value for Metavante by multiplying
the closing price of Metavante common stock on March 31,
2009 by the number of outstanding shares of Metavante common
stock on a fully diluted basis. Goldman Sachs then calculated an
enterprise value of Metavante (the EV) by adding to
the equity value total indebtedness and minority interests and
subtracting cash and cash equivalents, each as provided by FIS
management. Goldman Sachs calculated EV as a multiple of
earnings before interest, taxes and depreciation and
amortization, or EBITDA, and the price per share of Metavante
common stock on March 31, 2009 as a multiple of cash net
income (net income excluding the impact of amortization of
transaction intangibles) per share of Metavante based on the
management estimates for each of the years ending
December 31, 2009 and 2010 and estimates from the
Institutional Brokers Estimate System, or IBES, for each of the
years ending December 31, 2009 and 2010. For the year
ending December 31, 2010, Goldman Sachs also calculated
these multiples assuming 100% of the transaction synergies were
realized that year. Goldman Sachs then calculated an implied
enterprise value (the IEV) by multiplying the
implied transaction price of $24.57 by the total number of
outstanding shares of Metavante common stock on a fully diluted
basis and adding the amount of Metavante total indebtedness and
minority interest and subtracting cash and cash equivalents.
Goldman Sachs calculated IEV as a multiple of EBITDA and
calculated the implied transaction price of $24.57 as a multiple
of cash net income, in each case on the same basis as the
previous multiple calculations. The results of the analyses are
summarized in the tables below:
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|
Enterprise Value as a Multiple of EBITDA
|
|
|
Based on Closing Price
|
|
|
|
|
of Metavante on
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|
Based on Implied
|
Time Period
|
|
March 31, 2009
|
|
Transaction Price
|
|
Year ending December 31, 2009
|
|
7.5x (Mgmt)
7.6x (IBES)
|
|
8.6x (Mgmt)
8.7x (IBES)
|
Year ending December 31, 2010
|
|
6.8x (Mgmt)
7.1x (IBES)
|
|
7.8x (Mgmt)
8.1x (IBES)
|
Year ending December 31, 2010 (with transaction synergies)
|
|
4.5x (Mgmt)
4.6x (IBES)
|
|
5.2x (Mgmt)
5.3x (IBES)
|
50
|
|
|
|
|
Price per Share as a Multiple of Cash Net Income Per Share
|
|
|
Based on Closing Price
|
|
|
|
|
of Metavante on
|
|
|
|
|
March 31,
|
|
Based on Implied
|
Time Period
|
|
2009
|
|
Transaction Price
|
|
Year ending December 31, 2009
|
|
12.9x (Mgmt)
12.9x (IBES)
|
|
16.0x (Mgmt)
16.0x (IBES)
|
Year ending December 31, 2010
|
|
10.5x (Mgmt)
11.7x (IBES)
|
|
13.0x (Mgmt)
14.5x (IBES)
|
Year ending December 31, 2010 (with transaction synergies)
|
|
5.8x (Mgmt)
6.2x (IBES)
|
|
7.2x (Mgmt)
7.6x (IBES)
|
Exchange Ratio Analysis. Goldman Sachs
calculated the historical implied exchange ratios of Metavante
common stock to FIS common stock based on: (i) the closing
prices of Metavante common stock and FIS common stock on
March 31, 2009; (ii) the average closing prices of
Metavante common stock and FIS common stock for the 30-day,
90-day and 180-day periods ended March 31, 2009;
(iii) the average closing prices of Metavante common stock
and FIS common stock from October 29, 2007, the first date
that Metavante traded as a separate company, to March 31,
2009; and (iv) the average closing prices of Metavante
common stock and FIS common stock from February 10, 2009,
the date of the issuance by FIS of an earnings release
announcing financial results for the fourth quarter of 2008, to
March 31, 2009.
Goldman Sachs then calculated the premium of the exchange ratio
of 1.350 shares of FIS common stock to be issued in
exchange for each share of Metavante common stock pursuant to
the merger agreement relative to the implied exchange ratios.
The results of this analysis are presented in the table below:
|
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|
|
|
|
|
|
|
|
|
|
|
|
Premium to Implied
|
|
Time Period
|
|
Implied Exchange Ratio
|
|
|
Exchange Ratio
|
|
|
March 31, 2009
|
|
|
1.097
|
x
|
|
|
23.1
|
%
|
Since February 10, 2009
|
|
|
1.016
|
x
|
|
|
32.9
|
%
|
Prior 30 day period
|
|
|
1.023
|
x
|
|
|
32.0
|
%
|
Prior 90 day period
|
|
|
0.986
|
x
|
|
|
36.9
|
%
|
Prior 180 day period
|
|
|
1.014
|
x
|
|
|
33.2
|
%
|
Since October 29, 2007
|
|
|
1.014
|
x
|
|
|
33.1
|
%
|
Selected Companies Analysis. Goldman Sachs
reviewed and compared certain financial information for FIS and
Metavante to corresponding financial information, ratios and
public market multiples for the following publicly traded
corporations in the transaction processing industry:
|
|
|
|
|
Fiserv, Inc.;
|
|
|
|
Lender Processing Services, Inc.;
|
|
|
|
Total System Services, Inc.;
|
|
|
|
Global Payments Inc.; and
|
|
|
|
Jack Henry & Associates, Inc.
|
Although none of the selected companies is directly comparable
to FIS or Metavante, the companies included were chosen because
they are publicly traded companies with operations that for
purposes of analysis may be considered similar to certain
operations of FIS and Metavante.
The multiples and ratios for FIS and Metavante were calculated
using the respective FIS and Metavante closing prices on
March 31, 2009. The multiples and ratios for FIS and
Metavante were based on the management estimates and IBES
estimates. The multiples and ratios for each of the selected
companies were calculated using the closing price of the
selected companies common stock on March 31, 2009 and
were based on the most recent publicly available information and
IBES, Capital IQ and analyst estimates for 2009 and 2010. With
respect to the selected companies, Goldman Sachs calculated the
enterprise value, which is the
51
market value of common equity, on a fully diluted basis, plus
the value of debt less cash and cash equivalents, (i) as a
multiple of EBITDA for the year ended December 31, 2008 and
(ii) as a multiple of projected EBITDA for the years ending
December 31, 2009 and 2010, and compared these ratios to
the results for FIS and Metavante.
The results of this analysis are summarized in the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value as a Multiple of EBITDA
|
|
|
Selected Companies
|
|
|
|
|
|
Time Period
|
|
Range
|
|
|
Median
|
|
|
FIS
|
|
Metavante
|
|
Year ended December 31, 2008
|
|
|
5.6x - 8.3
|
x
|
|
|
7.3
|
x
|
|
7.2x
|
|
8.1x
|
Year ending December 31, 2009
|
|
|
5.2x - 7.6x
|
|
|
|
6.7
|
x
|
|
6.9x (Mgmt)
6.9x (IBES)
|
|
7.5x (Mgmt)
7.6x (IBES)
|
Year ending December 31, 2010
|
|
|
4.9x - 7.0x
|
|
|
|
6.4
|
x
|
|
6.1x (Mgmt)
6.5x (IBES)
|
|
6.8x (Mgmt)
7.1x (IBES)
|
Goldman Sachs also calculated the ratios of the closing price of
the selected companies common stock on March 31, 2009 to
earnings per share and estimated cash earnings per share for the
each of the years ending December 31, 2009 and 2010, and
compared these ratios to the results for FIS and Metavante.
The results of this analysis are summarized in the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
Price to Estimated GAAP Earnings Per Share Ratio
|
|
|
Selected Companies
|
|
|
|
|
|
Time Period
|
|
Range
|
|
|
Median
|
|
|
FIS
|
|
Metavante
|
|
Year ending December 31, 2009
|
|
|
10.9x - 14.5
|
x
|
|
|
12.1
|
x
|
|
14.7x (Mgmt)
17.7x (IBES)
|
|
14.3x (Mgmt)
14.0x (IBES)
|
Year ending December 31, 2010
|
|
|
10.2x - 12.5
|
x
|
|
|
10.5
|
x
|
|
9.8x (Mgmt)
13.7x (IBES)
|
|
11.5x (Mgmt)
12.8x (IBES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price to Estimated Cash Earnings Per Share Ratio
|
|
|
Selected Companies
|
|
|
|
|
|
Time Period
|
|
Range
|
|
|
Median
|
|
|
FIS
|
|
Metavante
|
|
Year ending December 31, 2009
|
|
|
10.0x - 13.8x
|
|
|
|
11.3x
|
|
|
11.0x (Mgmt)
11.2x (IBES)
|
|
12.9x (Mgmt)
12.9x (IBES)
|
Year ending December 31, 2010
|
|
|
8.9x - 12.0x
|
|
|
|
10.1x
|
|
|
8.3x (Mgmt)
10.0x (IBES)
|
|
10.5x (Mgmt)
11.7x (IBES)
|
Goldman Sachs also considered the IBES median projected
5-year
compound annual growth rate of earnings per share and projected
price to earnings growth ratio, or PEG ratio, for the years
ending December 31, 2009 and 2010, in each case based on
IBES median or other analyst estimates. Goldman Sachs calculated
the PEG ratio for FIS, Metavante and the selected companies
based on their respective closing stock prices on March 31,
2009, estimated earnings per share for calendar year 2009 and
2010 based on IBES median or other analysts estimates, and IBES
median projected
5-year
compound annual growth rate of earnings per share.
The results of this analysis are summarized in the following
table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Companies
|
|
|
|
|
|
|
|
|
|
Range
|
|
|
Median
|
|
|
FIS
|
|
|
Metavante
|
|
|
5 year compound annual growth rate of earnings per share
|
|
|
10.0% - 15.0%
|
|
|
|
15
|
.0%
|
|
|
13
|
.0%
|
|
|
11
|
.0%
|
Projected 2009 PEG Ratio
|
|
|
0.8x - 1.1x
|
|
|
|
1
|
.0x
|
|
|
1
|
.4x
|
|
|
1
|
.3x
|
Projected 2010 PEG Ratio
|
|
|
0.7x - 1.0x
|
|
|
|
0
|
.8x
|
|
|
1
|
.1x
|
|
|
1
|
.2x
|
Illustrative Discounted Cash Flow
Analysis. Goldman Sachs performed an illustrative
discounted cash flow analysis to determine a range of
illustrative implied present values per share of Metavante
common stock
52
based on projected unlevered free cash flows for Metavante for
the years ending December 31, 2009 through 2012, using the
management estimates. The analysis was based on a range of
discount rates from 7.0% to 10.0% and a terminal value of
Metavantes common stock based on multiples of last twelve
month (LTM) EBITDA ranging from 6.0x to 9.0x applied
to Metavantes estimated 2012 EBITDA. This analysis
resulted in a range of implied present values of $17.46 to
$33.00 per share of Metavante common stock.
Goldman Sachs performed a sensitivity analysis to illustrate the
effect of different assumptions for changes in projected annual
revenue growth from the management estimates and different
EBITDA terminal multiples. The projected annual growth rates for
calendar years ending December 31, 2009 through 2012 used
in the sensitivity analysis ranged from 3.5% to 6.5% and the
EBITDA terminal multiple ranged from 6.0x to 9.0x. This
sensitivity analysis, assuming a 8.0% discount rate and a 29.0%
EBITDA margin, resulted in a range of implied present values of
$15.23 to $28.12 per share of Metavante common stock.
Selected Transactions Analysis. Goldman Sachs
analyzed certain information relating to the following selected
transactions involving companies in the transaction processing
industry since 2003:
|
|
|
|
|
Fiserv Inc.s acquisition of CheckFree Corp.;
|
|
|
|
FIS acquisition of eFunds Corporation;
|
|
|
|
Kohlberg Kravis Roberts & Co. L.P.s acquisition
of First Data Corp.;
|
|
|
|
The Carlyle Group and Providence Equity Partners
acquisition of Open Solutions, Inc.;
|
|
|
|
FIS acquisition of Certegy, Inc.;
|
|
|
|
Bank of America Corporations acquisition of National
Processing, Inc.;
|
|
|
|
Metavantes acquisition of NYCE Corporation; and
|
|
|
|
First Data Corp.s acquisition of Concord EFS Inc.
|
While none of the companies (other than FIS and Metavante) that
participated in the selected transactions is directly comparable
to FIS and Metavante and none of the transactions in the
selected transactions analysis is directly comparable to the
merger, Goldman Sachs selected these transactions because each
of the target companies in the selected transactions was
involved in the transaction processing industry. For each of the
selected transactions, Goldman Sachs calculated and compared
equity value as a multiple of last twelve months net income and
of forward twelve months projected net income, and enterprise
value as a multiple of last twelve months EBITDA and of forward
twelve months projected EBITDA.
The results of this analysis are summarized in the following
table:
|
|
|
|
|
|
|
Selected Transactions
|
Equity Value as a Multiple of:
|
|
Range
|
|
Median
|
|
Last twelve months net income
|
|
18.5x - 41.3x
|
|
26.3x
|
Forward twelve months estimated net income
|
|
18.2x - 28.0x
|
|
24.1x
|
|
|
|
|
|
|
|
Selected Transactions
|
Enterprise Value as a Multiple of:
|
|
Range
|
|
Median
|
|
Last twelve months EBITDA
|
|
9.7x - 15.3x
|
|
11.2x
|
Forward twelve months estimated EBITDA
|
|
9.5x - 14.8x
|
|
10.2x
|
Pro Forma Analysis. Goldman Sachs prepared
illustrative pro forma analyses of the potential financial
impact of the merger assuming a closing date of June 30,
2009, and using earnings estimates contained in the management
estimates and IBES estimates. This pro forma analysis was based
on FIS management estimates of the future performance of the
combined company. Goldman Sachs compared the forecasted cash net
income per share of FIS common stock, on a standalone basis, to
the forecasted cash net income per share of the common stock of
the combined company. Using both management estimates and IBES
estimates, the pro forma analyses showed that the proposed
merger would be dilutive to FIS shareholders on a cash net
income
53
per share basis in the year ending December 31, 2009, and
accretive to FIS shareholders on a cash net income per
share basis in the year ending December 31, 2010.
Illustrative Synergy Analysis. Goldman Sachs
also reviewed the transaction synergies estimates that were
presented to Goldman Sachs by the managements of FIS and
Metavante. The transaction synergies reflect the incremental
benefits that the managements of FIS and Metavante then expected
to achieve as a result of the merger, including cost saving and
revenue synergies. The transaction synergies are based upon the
assumption of FIS management and Metavante management that the
combined company will begin to realize these transaction
synergies in the second half of 2009, but the combined company
will not fully realize the cost saving synergies until the
second half of 2011 and will not fully realize the revenue
synergies until 2012. The analysis is based on the assumption
that the transaction synergies would be recognized in various
business areas, including payment processing, core processing,
sales & marketing, corporate and IT &
operations.
Goldman Sachs analyzed the transaction synergies by calculating
the present value of the net synergies applying discount rates
ranging from 7.0% to 10.0%. The analysis assumes 0% perpetual
growth rate and discounts the implied synergy value back to
March 31, 2009. This analysis resulted in (i) an
implied value for the transaction synergies of approximately
$1.7 billion to $2.5 billion, assuming that 100% of
the transaction synergies are actually realized, (ii) an
implied value per share of the transaction synergies between
$4.59 and $6.71, based on the pro forma outstanding shares of
common stock of the combined company, and (iii) an implied
value per share of Metavante common stock between $14.20 and
$20.79 per share on a fully diluted basis. Goldman Sachs
performed a sensitivity analysis to illustrate the effect of
different amounts of realized net synergies ranging from
$270 million to $345 million, applying discount rates
ranging from 7.0% to 10.0%. The sensitivity analysis resulted in
an implied value for the transaction synergies of approximately
$1.6 billion to $2.9 billion, of $4.29 to $7.66 per
share on a pro forma basis and of $13.27 to $23.73 per share of
Metavante common stock.
Contribution Analysis. Goldman Sachs analyzed
and compared FIS and Metavante shareholders respective
expected percentage ownership of the combined company to
FIS and Metavantes respective contributions (and the
implied equity value percentage contributions) to the combined
company based upon the revenues, EBITDA and cash net income for
calendar year 2008 and based upon estimated revenues, EBITDA and
cash net income for calendar years 2009 and 2010, based on
management estimates. For purposes of this analysis, Goldman
Sachs assumed that 50% of the transaction synergies were
attributable to each of FIS and Metavante. Goldman Sachs noted
that the implied equity ownership of Metavante shareholders in
the combined company based on the exchange ratio of
1.350 shares of FIS common stock to be issued in exchange
for each share of Metavante common stock represented 45.8%
without the impact of the equity capital investment, and 44.1%
with the impact of the equity capital investment. This analysis
indicated that the implied equity value percentage contribution
of Metavante to the combined company based on the contribution
analyses described above ranged from 30.3% to 40.5%.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company (other than FIS or
Metavante) or transaction used in the above analyses as a
comparison is directly comparable to FIS or Metavante or the
merger.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to the FIS board of directors
as to the fairness to FIS from a financial point of view of the
exchange ratio of 1.350 shares of FIS common stock per
share of Metavante common stock to be paid by FIS pursuant to
the merger agreement. These analyses do not purport to be
appraisals nor do they necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based
upon forecasts of future results, including estimates of
achievable synergies, are not necessarily indicative of actual
future results, which may be significantly more or less
favorable than suggested by these analyses. Because these
analyses are inherently
54
subject to uncertainty, being based upon numerous factors or
events beyond the control of the parties or their respective
advisors, none of FIS, Metavante, Goldman Sachs or any other
person assumes responsibility if future results are materially
different from those forecast.
The exchange ratio of 1.350 shares of FIS common stock to
be issued in exchange for each share of Metavante common stock
pursuant to the merger agreement was determined through
arms-length negotiations between FIS and Metavante and was
approved by the FIS board of directors. Goldman Sachs provided
advice to FIS during these negotiations. Goldman Sachs did not,
however, recommend any specific exchange ratio to FIS or its
board of directors or that any specific exchange ratio
constituted the only appropriate exchange ratio for the merger.
As described above, Goldman Sachs opinion to the FIS board
of directors was one of a number of factors taken into
consideration by the FIS board of directors in making its
determination to approve the merger agreement and the merger.
The foregoing summary does not purport to be a complete
description of the analyses performed by Goldman Sachs in
connection with the fairness opinion and is qualified in its
entirety by reference to the written opinion of Goldman Sachs
attached as Appendix C.
Goldman Sachs and its affiliates are engaged in investment
banking and financial advisory services, securities trading,
investment management, principal investment, financial planning,
benefits counseling, risk management, hedging, financing,
brokerage activities and other financial and non-financial
activities and services for various persons and entities. In the
ordinary course of these activities and services, Goldman Sachs
and its affiliates may at any time make or hold long or short
positions and investments, as well as actively trade or effect
transactions, in the equity, debt and other securities (or
related derivative securities) and financial instruments
(including bank loans and other obligations) of FIS, Metavante,
the equity capital investors, Warburg Pincus LLC, and any of
their respective affiliates or any currency or commodity that
may be involved in the merger for their own account and for the
accounts of their customers. Goldman Sachs acted as financial
advisor to FIS in connection with, and participated in certain
of the negotiations leading to, the merger. In addition, Goldman
Sachs has provided certain investment banking and other
financial services to FIS and its affiliates from time to time,
including having provided $25 million of FIS credit
facility and term loan in August 2007. Goldman Sachs also has
provided certain investment banking and other financial services
to Thomas H. Lee Partners, L.P. and its affiliates and portfolio
companies from time to time, including having acted as financial
advisor to Houghton Mifflin Holding Company, Inc., a former
portfolio company of Thomas H. Lee Partners, L.P., in connection
with its sale in December 2006; and as joint lead arranger and
joint bookrunner in connection with senior secured credit
facilities (aggregate principal amount of $5 billion)
provided to a consortium that included Thomas H. Lee Partners,
L.P. in connection with the acquisition of Aramark Corporation
in January 2007. Goldman Sachs also has provided certain
investment banking and other financial services to Warburg
Pincus LLC and its affiliates and portfolio companies from time
to time, including having acted as joint bookrunner for Nuance
Communications Inc., a company in which Warburg Pincus LLC has
an ownership stake, for its $250 million convertible debt
offering in August 2007; and as joint bookrunner for Targa
Resources Partners LP, a former Warburg Pincus LLC portfolio
company, with respect to its common stock offering in October
2007. Goldman Sachs also may provide investment banking and
other financial services to FIS, Metavante, Thomas H. Lee
Partners, L.P., FNF, Warburg Pincus LLC, and any of their
respective affiliates and portfolio companies in the future. In
connection with the above-described services Goldman Sachs has
received, and may receive in the future, compensation. In
addition, affiliates of Goldman Sachs (i) have co-invested
with Thomas H. Lee Partners, L.P., Warburg Pincus LLC and their
respective affiliates from time to time and may do so in the
future and (ii) have invested and may invest in the future
in limited partnership interests of affiliates of Thomas H. Lee
Partners, L.P. and Warburg Pincus LLC.
The board of directors of FIS selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the merger. Pursuant to a letter
agreement dated March 20, 2009, FIS engaged Goldman Sachs
to act as its financial advisor in connection with the
contemplated transaction. Pursuant to the terms of this
engagement letter, FIS has agreed to pay Goldman Sachs a
transaction fee of approximately $10.0 million,
$2.5 million of which was paid upon execution of the merger
agreement and $7.5 million of which is payable upon
consummation of the merger. In addition, FIS has agreed to
reimburse Goldman Sachs for its expenses,
55
including attorneys fees and disbursements, and to
indemnify Goldman Sachs and related persons against various
liabilities, including certain liabilities under the federal
securities laws.
Opinion
of Banc of America Securities
FIS retained Banc of America Securities to act as FIS
financial advisor in connection with the merger. Banc of America
Securities is an internationally recognized investment banking
firm which is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for
corporate and other purposes. FIS selected Banc of America
Securities to act as FIS financial advisor in connection
with the merger on the basis of Banc of America Securities
experience in transactions similar to the merger, its reputation
in the investment community and its familiarity with FIS and its
business.
On March 30, 2009, at a meeting of the FIS board of
directors held to evaluate the merger, Banc of America
Securities delivered to the FIS board of directors an oral
opinion, which was confirmed by delivery of a written opinion
dated March 31, 2009, to the effect that, as of the date of
the written opinion and based on and subject to various
assumptions and limitations described in its opinion, the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock as
provided for in the merger was fair, from a financial point of
view, to FIS.
The full text of Banc of America Securities written
opinion to the FIS board of directors, which describes, among
other things, the assumptions made, procedures followed, factors
considered and limitations on the review undertaken, is attached
as Appendix D to this document and is incorporated by
reference herein in its entirety. The following summary of Banc
of America Securities opinion is qualified in its entirety
by reference to the full text of the opinion. Banc of America
Securities delivered its opinion to the FIS board of directors
for the benefit and use of the FIS board of directors in
connection with, and for purposes of, its evaluation of the
merger. Banc of America Securities opinion addresses only
the fairness to FIS of the exchange ratio of 1.350 shares
of FIS common stock to be issued in exchange for each share of
Metavante common stock pursuant to the merger agreement from a
financial point of view and does not constitute a
recommendation to any shareholder of FIS as to how to vote or
act in connection with such merger.
In connection with rendering its opinion, Banc of America
Securities:
|
|
|
|
|
reviewed certain publicly available business and financial
information relating to FIS and Metavante;
|
|
|
|
reviewed certain internal financial and operating information
with respect to the business, operations and prospects of
Metavante and FIS furnished to or discussed with Banc of America
Securities by the management of Metavante or FIS, including
certain financial forecasts relating to Metavante and FIS
prepared by the management of Metavante or FIS (the
management estimates);
|
|
|
|
reviewed certain estimates as to the amount and timing of cost
savings (collectively, the cost savings) anticipated
by the management of FIS to result from the merger;
|
|
|
|
discussed the past and current business, operations, financial
condition and prospects of Metavante with members of senior
management of Metavante and FIS, and discussed the past and
current business, operations, financial condition and prospects
of FIS with members of senior management of FIS;
|
|
|
|
reviewed the potential pro forma financial impact of the merger
on the future financial performance of FIS, including the
potential effect on FIS estimated earnings per share;
|
|
|
|
reviewed the trading histories for shares of Metavante common
stock and shares of FIS common stock and a comparison of such
trading histories with each other and with the trading histories
of other companies Banc of America Securities deemed relevant;
|
|
|
|
compared certain financial and stock market information of
Metavante and FIS with similar information of other companies
Banc of America Securities deemed relevant;
|
|
|
|
compared certain financial terms of the merger to financial
terms, to the extent publicly available, of other transactions
Banc of America Securities deemed relevant;
|
56
|
|
|
|
|
reviewed the relative financial contributions of Metavante and
FIS to the future financial performance of the combined company
on a pro forma basis;
|
|
|
|
reviewed the merger agreement; and
|
|
|
|
performed such other analyses and studies and considered such
other information and factors as Banc of America Securities
deemed appropriate.
|
In arriving at its opinion, Banc of America Securities assumed
and relied upon, without independent verification, the accuracy
and completeness of the financial and other information and data
publicly available or provided to or otherwise reviewed by or
discussed with it and relied upon the assurances of the
managements of FIS and Metavante that they were not aware of any
facts or circumstances that would make such information or data
inaccurate or misleading in any material respect. With respect
to the Metavante management estimates, Banc of America
Securities was advised by Metavante, and assumed with FIS
consent, that such estimates have been reasonably prepared on a
basis reflecting the best currently available estimates and good
faith judgments of the management of Metavante as to the future
financial performance of Metavante. With respect to the FIS
management estimates and the cost savings, Banc of America
Securities assumed, at the direction of FIS, that such estimates
have been reasonably prepared on a basis reflecting the best
currently available estimates and good faith judgments of the
management of FIS as to the future financial performance of FIS
and the other matters covered thereby. Banc of America
Securities relied, at the direction of FIS, on the assessments
of the management of FIS as to FIS ability to achieve the
cost savings and was advised by FIS, and assumed, that the cost
savings would be realized in the amounts and at the times
projected. Banc of America Securities did not make or was not
provided with any independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of Metavante or
FIS, nor did it make any physical inspection of the properties
or assets of Metavante or FIS. Banc of America Securities did
not evaluate the solvency of Metavante or FIS under any state,
federal or other laws relating to bankruptcy, insolvency or
similar matters.
Banc of America Securities assumed, at FIS direction, that
the merger would be consummated in accordance with its terms,
without waiver, modification or amendment of any material term,
condition or agreement and that, in the course of obtaining the
necessary governmental, regulatory and other approvals,
consents, releases and waivers for the merger, no delay,
limitation, restriction or condition would be imposed that would
have an adverse effect on Metavante, FIS or the contemplated
benefits of the merger in a way meaningful to their analysis.
Banc of America Securities also assumed, at FIS direction,
that the spin-off of each of (x) M&I from Metavante on
November 1, 2007 and (y) LPS from FIS on July 2,
2008 qualify and at all times will continue to qualify as a
distribution eligible for tax-free treatment under
Sections 355 and 361(c) of the Code, after application of
Sections 355(d) and 355(e) of the Code and that the related
asset contributions and debt exchanges qualify and at all times
will continue to qualify as reorganizations eligible for
tax-free treatment under Section 368 of the Code. In
addition, Banc of America Securities was informed by
representatives of FIS that the lenders under Metavantes
current credit facility and term loan dated November 1,
2007 had consented on the terms such representatives had
previously indicated to Banc of America Securities to
refinancing the indebtedness outstanding thereunder, and Banc of
America Securities assumed, at FIS direction, that such
indebtedness would be refinanced in accordance with those terms.
Banc of America Securities expressed no view or opinion as to
any terms or other aspects of the merger (other than the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock
pursuant to the merger to the extent expressly specified in its
opinion) or any related transaction, including, without
limitation, the form or structure of the merger. Banc of America
Securities opinion was limited to the fairness, from a
financial point of view, to FIS of the exchange ratio of
1.350 shares of FIS common stock to be issued in exchange
for each share of Metavante common stock provided for in the
merger and no opinion or view was expressed with respect to any
consideration received in connection with the merger by the
holders of any class of securities, creditors or other
constituencies of any party to the merger. Banc of America
Securities expressed no opinion or view with respect to any
investment in FIS concurrent or in connection with the merger,
including the proposed investment in FIS by THL and FNF. In
addition, no opinion or view was expressed with respect to the
fairness of the amount, nature or any
57
other aspect of the compensation to any of the officers,
directors or employees of any party to the merger, or class of
such persons, relative to the exchange ratio of 1.350 shares of
FIS common stock to be issued in exchange for each share of
Metavante common stock pursuant to the merger agreement.
Furthermore, no opinion or view was expressed as to the relative
merits of the merger or any related transaction in comparison to
other strategies or transactions that might be available to FIS
or in which FIS might engage or as to the underlying business
decision of FIS to proceed with or effect the merger or any
related transaction. Banc of America Securities did not express
any opinion as to what the value of FIS common stock actually
would be when issued or the prices at which FIS common stock or
Metavante common stock would trade at any time. In addition,
Banc of America Securities expressed no opinion or
recommendation as to how any shareholder should vote or act in
connection with the merger. Except as described above, FIS
imposed no other limitations on the investigations made or
procedures followed by Banc of America Securities in rendering
its opinion.
Banc of America Securities opinion was necessarily based
on financial, economic, monetary, market and other conditions
and circumstances as in effect on, and the information made
available to Banc of America Securities as of, the date of its
opinion. It should be understood that subsequent developments
may affect its opinion, and Banc of America Securities does not
have any obligation to update, revise or reaffirm its opinion.
The issuance of Banc of America Securities opinion was
approved by Banc of America Securities Fairness Opinion
Review Committee.
The following represents a brief summary of the material
financial analyses presented by Banc of America Securities to
the FIS board of directors in connection with its opinion. The
financial analyses summarized below include information
presented in tabular format. In order to fully understand the
financial analyses performed by Banc of America Securities, the
tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the
financial analyses performed by Banc of America Securities.
Considering the data set forth in the tables below without
considering the full narrative description of the financial
analyses, including the methodologies and assumptions underlying
the analyses, could create a misleading or incomplete view of
the financial analyses performed by Banc of America Securities.
Financial
Analyses
Selected Publicly Traded Companies
Analysis. Banc of America Securities performed
separate selected publicly traded companies analyses of FIS and
Metavante in which Banc of America Securities reviewed publicly
available financial and stock market information for FIS,
Metavante and the following three publicly traded companies in
the transaction processing industry:
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|
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Jack Henry & Associates, Inc.;
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LPS; and
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|
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|
Fiserv, Inc.
|
Metavante. In performing a selected publicly
traded companies analysis of Metavante, Banc of America
Securities reviewed financial and stock market information of
the selected publicly traded companies referred to above and
FIS, referred to herein as the Metavante selected companies.
Banc of America Securities reviewed, among other things,
enterprise values of the Metavante selected companies,
calculated as equity values based on closing stock prices on
March 30, 2009, plus net debt (including minority interest)
as a multiple of estimated EBITDA, for each of the years ending
December 31, 2009 and 2010. Banc of America Securities then
applied a range of selected EBITDA multiples of calendar year
2009 and 2010 derived from the Metavante selected companies to
the corresponding data of Metavante, both with and without
giving effect to the cost savings anticipated by the management
of FIS to result from the merger.
Banc of America Securities also reviewed per share equity
values, based on closing stock prices on March 30, 2009, of
the Metavante selected companies as a multiple of estimated cash
earnings per share on a fully diluted basis, commonly referred
to as cash EPS, for each of the years ending December 31,
2009 and 2010. Banc of America Securities then applied a range
of selected cash EPS multiples of calendar years 2009 and 2010
derived from the Metavante selected companies to the
corresponding data of Metavante, both with
58
and without giving effect to the cost savings anticipated by the
management of FIS to result from the merger. Estimated financial
data of the Metavante selected companies were based on publicly
available filings, publicly available research analysts
estimates and First Call consensus estimates. Estimated
financial data of Metavante were based on management estimates.
This analysis indicated the following implied per share equity
value reference ranges for Metavante:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied per Share Equity Value Reference Ranges for
Metavante
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|
Metavante Mgmt
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|
2009E EBITDA
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|
2010E EBITDA
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|
2009E Cash EPS
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|
2010E Cash EPS
|
|
|
Excluding Cost Savings
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$
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15.75 - $20.00
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|
|
$
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16.00 - $20.75
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|
$
|
14.75 - $19.50
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|
|
$
|
16.00 - $22.50
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|
Including Cost Savings
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|
$
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30.25 - $34.50
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|
|
$
|
30.50 - $35.25
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|
|
$
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29.25 - $34.00
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$
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30.50 - $37.00
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|
The implied per share equity value reference ranges, as adjusted
to include the cost savings, reflect a net present value of
after tax synergies (net of one time charges), using a
discounted cash flow terminal multiple and discount rate of 7.0x
and 8.0%, respectively, of $14.50 per Metavante share.
FIS. In performing a selected publicly traded
companies analysis of FIS, Banc of America Securities reviewed
financial and stock market information of the selected publicly
traded companies referred to above and Metavante, referred to
herein as the FIS selected companies. Banc of America Securities
reviewed, among other things, enterprise values of the FIS
selected companies, calculated as equity values based on closing
stock prices on March 30, 2009, plus net debt (including
minority interest) as a multiple of EBITDA, for each of the
years ending December 31, 2009 and 2010. Banc of America
Securities then applied a range of selected EBITDA multiples of
calendar year 2009 and 2010 derived from the FIS selected
companies to the corresponding data of FIS.
Banc of America Securities also reviewed per share equity
values, based on closing stock prices on March 30, 2009, of
the FIS selected companies as a multiple of estimated cash
earnings per share on a fully diluted basis, commonly referred
to as cash EPS, for each of the years ending December 31,
2009 and 2010. Banc of America Securities then applied a range
of selected cash EPS multiples of calendar years 2009 and 2010
derived from the FIS selected companies to the corresponding
data of FIS. Estimated financial data of the FIS selected
companies were based on publicly available filings, publicly
available research analysts estimates and First Call
consensus estimates. Estimated financial data of FIS were based
on management estimates. This analysis indicated the following
implied per share equity value reference ranges for FIS:
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|
|
|
|
Implied per Share Equity Value Reference Ranges for FIS
|
2009E EBITDA
|
|
2010E EBITDA
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|
2009E Cash EPS
|
|
2010E Cash EPS
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|
$16.50 - $21.00
|
|
$17.75 - $23.00
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|
$15.75 - $20.75
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|
$18.75 - $26.50
|
Based on the per share equity reference ranges implied for FIS
and Metavante by the analysis described above, Banc of America
Securities calculated the following implied exchange ratio
reference ranges, as compared to the exchange ratio of
1.350 shares of FIS common stock to be issued in exchange
for each share of Metavante common stock provided for in the
merger:
|
|
|
Implied Exchange Ratio Reference Ranges Based on
|
Mgmt Estimates Excluding Cost Savings
|
|
Mgmt Estimates Including Cost Savings
|
|
0.60x - 1.24x
|
|
0.60x - 2.16x
|
No company used in these analyses is identical or directly
comparable to FIS or Metavante. Accordingly, an evaluation of
the results of these analyses is not entirely mathematical.
Rather, these analyses involve complex considerations and
judgments concerning differences in financial and operating
characteristics and other factors that could affect the public
trading or other values of the companies to which FIS and
Metavante were compared.
59
Selected Precedent Transactions Analysis. Banc
of America Securities reviewed, to the extent publicly
available, financial information relating to the following 19
selected transactions involving companies in the transaction
processing industry:
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Announcement Date
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Acquiror
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Target
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4/2/2003
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First Data Corp.
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Concord EFS Inc.
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5/17/2004
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Metavante
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NYCE Corporation
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7/13/2004
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|
Bank of America Corporation
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|
National Processing, Inc.
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12/23/2004
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|
Thomas H. Lee Partners, L.P. and Texas Pacific Group
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FIS
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2/28/2005
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Apax Partners
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|
Travelex Plc
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3/28/2005
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|
Silver Lake Partners, Bain Capital, The Blackstone Group,
Goldman Sachs Capital Partners, Kohlberg Kravis Roberts &
Co., L.P., Providence Equity Partners and Texas Pacific Group
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SunGard Data Systems, Inc.
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9/15/2005
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|
FIS
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Certegy, Inc.
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9/22/2005
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Investcorp
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CCC Information Services Group, Inc.
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12/27/2005
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Fidelity National Financial, Inc.
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Sedgwick Claims
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12/27/2005
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Management
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iPayment, Inc.
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2/8/2006
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Solera, Inc.
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Automatic Data Processing, Inc.s Claims Services Group
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10/14/2006
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The Carlyle Group and Providence Equity Partners, Inc.
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Open Solutions, Inc.
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12/20/2006
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M & F Worldwide Corp.
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John H. Harland Co.
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4/2/2007
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Kohlberg Kravis Roberts & Co. L.P.
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First Data Corp.
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4/3/2007
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Warburg Pincus LLC
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Metavante Technologies, Inc.
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5/30/2007
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Fidelity National Financial, Inc./ Thomas H. Lee Partners,
L.P.
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Ceridian Corporation
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6/27/2007
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FIS
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EFD/eFunds Corporation
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8/2/2007
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Fiserv, Inc.
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CheckFree Corp.
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3/30/2009
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Advent International Corporation
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Fifth Third Bancorps Processing Business
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Banc of America Securities reviewed transaction values,
calculated as the enterprise value implied for the target
company based on the consideration payable in the selected
transactions as a multiple of the target companys last
twelve months EBITDA. Banc of America Securities then applied a
range of selected multiples derived from the selected
transactions to Metavantes last twelve months EBITDA.
Estimated financial data of the selected transactions were based
on publicly available information. Financial data of Metavante
was based on publicly available information. This analysis
indicated the following implied per share equity reference range
for Metavante, as compared to the closing stock price of
Metavante on March 30, 2009 and the implied per share
purchase price:
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|
Implied per Share Equity Value Reference Range for
Metavante
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$23.50 - $31.50
|
Based on the implied precedent transaction valuation ranges for
Metavante calculated above and the implied per share reference
ranges derived for FIS in the selected publicly traded companies
analysis described above, Banc of America Securities calculated
the following implied exchange ratio reference ranges, as
compared to the exchange ratio of 1.350 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock provided for in the merger:
|
|
|
Implied Exchange Ratio Reference Range
|
|
1.12x - 1.91x
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60
No company (other than Metavante), business or transaction used
in this analysis is identical or directly comparable to
Metavante or the merger. Accordingly, an evaluation of the
results of this analysis is not entirely mathematical. Rather,
this analysis involves complex considerations and judgments
concerning differences in financial and operating
characteristics and other factors that could affect the
acquisition or other values of the companies, business segments
or transactions to which Metavante and the merger were compared.
Discounted Cash Flow Analysis. Banc of America
Securities performed a discounted cash flow analysis of each of
FIS and Metavante by calculating the estimated present value of
the standalone unlevered, after-tax free cash flows that FIS and
Metavante could generate during fiscal years ending
December 31, 2009 through 2012 based on management
estimates.
Metavante. In its discounted cash flow
analysis of Metavante, Banc of America Securities calculated
terminal values for Metavante by applying terminal multiples
ranging from 6.5x to 7.5x to Metavantes estimated EBITDA
for the fiscal year ending December 31, 2012, both
including and excluding the cost savings. The cash flows and
terminal values were then discounted to present value as of
June 30, 2009 using discount rates ranging from 7.0% to
9.0%. This analysis indicated the following implied per share
equity value reference ranges for Metavante:
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|
Implied per Share Equity Value
|
Metavante Mgmt
|
|
Reference Range for Metavante
|
|
Excluding Cost Savings
|
|
$23.00 - $29.50
|
Including Cost Savings
|
|
$37.50 - $44.00
|
The implied per share equity value reference ranges, as adjusted
to include the cost savings, reflect a net present value of
after tax synergies (net of one time charges), using a
discounted cash flow terminal multiple and discount rate of 7.0x
and 8.0%, respectively, of $14.50 per Metavante share.
FIS. In its discounted cash flow analysis of
FIS, Banc of America Securities calculated terminal values for
FIS by applying terminal forward multiples ranging from 6.5x to
7.5x to FIS estimated EBITDA for the fiscal year ending
December 31, 2012. The cash flows and terminal values were
then discounted to present value as of June 30, 2009 using
discount rates ranging from 7.0% to 9.0%. This analysis
indicated the following implied per share equity value reference
range for FIS:
|
|
|
Implied per Share Equity Value
|
Reference Range for FIS
|
|
$27.00 - $34.25
|
Based on the implied per share equity value reference ranges for
FIS and Metavante calculated in the discounted cash flow
analysis described above, Banc of America Securities calculated
the following implied exchange ratio reference ranges, as
compared to the exchange ratio of 1.350 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock provided for in the merger:
|
|
|
Implied Exchange Ratio Reference Ranges Based on
|
Mgmt Estimates Excluding Cost Savings
|
|
Mgmt Estimates Including Cost Savings
|
|
0.67x - 1.09x
|
|
0.67x - 1.63x
|
Contribution Analysis. Banc of America
Securities reviewed the relative financial contributions of FIS
and Metavante to the future financial performance of the
combined company on a pro forma basis with and without giving
effect to the potential cost savings. Banc of America Securities
reviewed the calendar years 2009 through 2012 estimated EBITDA,
EBITA and cash net income based on management estimates. Based
on these relative contributions, Banc of America Securities
calculated the implied exchange reference ratio, as
61
compared to the exchange ratio of 1.350 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock provided for in the merger:
|
|
|
|
|
Implied Exchange Ratio
|
|
|
Reference Ranges
|
|
Excluding Cost Savings
|
|
0.77x - 1.10x
|
Including Cost Savings (Applied to Metavante)
|
|
1.22x - 1.89x
|
Combined Discounted Cash Flow Analysis. In
addition, Banc of America Securities performed a discounted cash
flow analysis on the combined company using management
estimates. In its combined discounted cash flow analysis, Banc
of America Securities calculated terminal values for the
combined business by applying terminal multiples ranging from
6.5x to 7.5x to the combined estimated EBITDA for the fiscal
year ending December 31, 2012, both including and excluding
the cost savings and assuming $0 to $250 million of equity
issuance. In addition, Banc of America Securities calculated
terminal values for the combined business by applying perpetual
free cash flow growth rates ranging from 1.0% to 2.0% to the
combined unlevered free cash flow for the fiscal year ending
December 31, 2012, both including and excluding the cost
savings. The cash flows and terminal values were then discounted
to present value as of June 30, 2009 using discount rates
ranging from 7.0% to 9.0%. This analysis indicated the following
implied per share equity value reference ranges as compared to
the discounted cash flow analysis for FIS described above.
|
|
|
|
|
|
|
FIS Standalone
|
|
Combined
|
Assuming 7x EBITDA
|
|
Assuming 1.5% Free
|
|
Assuming 7x EBITDA
|
|
Assuming 1.5% Free
|
Multiple and 8.0%
|
|
Cash Flow Growth and
|
|
Multiple and 8.0%
|
|
Cash Flow Growth and
|
Discount Rate
|
|
8.0% Discount Rate
|
|
Discount Rate
|
|
8.0% Discount Rate
|
|
$30.50
|
|
$35.25
|
|
$29.25
|
|
$35.75
|
Historical Exchange Ratio Analysis. Banc of
America Securities calculated the historical implied exchange
ratios of Metavante common stock to FIS common stock based on:
(i) the closing prices of Metavante common stock and FIS
common stock on March 30, 2009; (ii) the closing
prices of Metavante common stock and FIS common stock for the
30-trading day, 90-trading day and 180-trading day periods ended
March 30, 2009; and (iii) the closing prices of
Metavante common stock and FIS common stock from July 2,
2008, the date of the first trading day after FIS spin-off
of Lending Processing Services, to March 30, 2009.
Banc of America Securities then calculated the premium of the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock
pursuant to the merger agreement relative to the implied
exchange ratios. This analysis implied the following exchange
ratios and premiums:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange
|
|
|
Premium to Implied
|
|
Time Period
|
|
Ratio
|
|
|
Exchange Ratio
|
|
|
30-Trading Day Average Exchange Ratio
|
|
|
1.02x
|
|
|
|
32.6
|
%
|
60-Trading Day Average Exchange Ratio
|
|
|
0.98x
|
|
|
|
37.5
|
%
|
90-Trading Day Average Exchange Ratio
|
|
|
0.98x
|
|
|
|
37.1
|
%
|
Average Exchange Ratio Since July 2, 2008
|
|
|
1.02x
|
|
|
|
32.3
|
%
|
March 30, 2009
|
|
|
1.09x
|
|
|
|
23.9
|
%
|
Pro Forma Accretion/Dilution Analysis. Banc of
America Securities reviewed the potential pro forma financial
effect of the merger on FIS calendar years ending
December 31, 2010 through 2012 estimated EPS on a pro forma
basis (i) without giving effect to the potential cost
savings and (ii) giving effect to the potential cost
savings. Estimated financial data of FIS and Metavante were
based on management estimates. The actual results achieved by
the combined company may vary from projected results and the
variations may be material. Excluding cost savings, these pro
forma analyses indicated that the merger could be dilutive to
FIS estimated EPS for each of the years ending
December 31, 2010 through 2012. Including the cost savings
estimated by FIS management (but excluding revenue synergies),
these pro forma analyses indicated that the
62
merger would be dilutive to FIS estimated EPS for the year
ending December 31, 2010, and would be accretive to
FIS estimated EPS for each of the years ending
December 31, 2011 and 2012.
Other
Factors
In rendering its opinion, Banc of America Securities also
reviewed and considered other factors, including historical
trading prices of FIS and Metavante during various time periods
prior to March 31, 2009, the premium implied by the
exchange ratio of 1.350 shares of FIS common stock to be
issued in exchange for each share of Metavante common stock
pursuant to the merger agreement to various historical share
prices of Metavante and the transaction multiples (as a multiple
of various metrics provided in the management estimates) implied
by the exchange ratio of 1.350 shares of FIS common stock
to be issued in exchange for each share of Metavante common
stock pursuant to the merger agreement.
Miscellaneous
As noted above, the discussion set forth above is a summary of
the material financial analyses presented by Banc of America
Securities to the FIS board of directors in connection with its
opinion and is not a comprehensive description of all analyses
undertaken by Banc of America Securities in connection with its
opinion. The preparation of a financial opinion is a complex
analytical process involving various determinations as to the
most appropriate and relevant methods of financial analysis and
the application of those methods to the particular circumstances
and, therefore, a financial opinion is not readily susceptible
to partial analysis or summary description. Banc of America
Securities believes that its analyses summarized above must be
considered as a whole. Banc of America Securities further
believes that selecting portions of its analyses and the factors
considered or focusing on information presented in tabular
format, without considering all analyses and factors or the
narrative description of the analyses, could create a misleading
or incomplete view of the processes underlying Banc of America
Securities analyses and opinion. The fact that any
specific analysis has been referred to in the summary above is
not meant to indicate that such analysis was given greater
weight than any other analysis referred to in the summary.
In performing its analyses, Banc of America Securities
considered industry performance, general business and economic
conditions and other matters, many of which are beyond the
control of FIS and Metavante. The estimates of the future
performance of FIS and Metavante in or underlying Banc of
America Securities analyses are not necessarily indicative
of actual values or actual future results, which may be
significantly more or less favorable than those estimates or
those suggested by Banc of America Securities analyses.
These analyses were prepared solely as part of Banc of America
Securities analysis of the fairness, from a financial
point of view, of the exchange ratio of 1.350 shares of FIS
common stock to be issued in exchange for each share of
Metavante common stock provided for in the merger, and were
provided to the FIS board of directors in connection with the
delivery of Banc of America Securities opinion. The
analyses do not purport to be appraisals or to reflect the
prices at which a company might actually be sold or the prices
at which any securities have traded or may trade at any time in
the future. Accordingly, the estimates used in, and the ranges
of valuations resulting from, any particular analysis described
above are inherently subject to substantial uncertainty.
The type and amount of consideration payable in the merger was
determined through negotiations between FIS and Metavante, and
was approved by the FIS board of directors. The decision to
enter into the merger agreement was solely that of the FIS board
of directors. As described above, Banc of America
Securities opinion and analyses were only one of a number
of factors considered by the FIS board of directors in its
evaluation of the proposed merger.
FIS has agreed to pay Banc of America Securities for its
services in connection with the merger an aggregate fee of
$10.0 million, $2.5 million of which was paid upon
delivery of its opinion and $7.5 million of which is
contingent upon the closing of the merger. FIS also has agreed
to reimburse Banc of America Securities for its expenses
incurred in connection with Banc of America Securities
engagement and to indemnify Banc of America Securities, any
controlling person of Banc of America Securities and each of
their
63
respective directors, officers, employees, agents and affiliates
against specified liabilities, including liabilities under the
federal securities laws.
Banc of America Securities and its affiliates comprise a full
service securities firm and commercial bank engaged in
securities trading and brokerage activities and principal
investing as well as providing investment, corporate and private
banking, asset and investment management, financing and
financial advisory services and other commercial services and
products to a wide range of corporations and individuals. In the
ordinary course of their businesses, Banc of America Securities
and its affiliates may actively trade the debt, equity or other
securities or financial instruments (including bank loans or
other obligations) of FIS, Metavante, Warburg Pincus LLC, Thomas
H. Lee Partners, L.P., FNF and certain of their respective
affiliates for their own accounts or for the accounts of
customers, and accordingly, Banc of America Securities or its
affiliates may at any time hold long or short positions in such
securities or financial instruments. In addition, certain of
Banc of America Securities affiliates maintain commercial
(including vendor
and/or
customer) relationships with FIS, Metavante, FNF and certain of
their respective affiliates.
Banc of America Securities and its affiliates in the past have
provided, currently are providing, and in the future may provide
investment banking, commercial banking and other financial
services to FIS and certain of its affiliates and have received
or in the future may receive compensation for the rendering of
these services, including (i) acting as joint lead
arranger, joint book running manager, syndication agent and
lender under FIS current credit facility, (ii) having
acted as financial advisor to FIS and certain of its affiliates
in connection with certain merger and acquisition transactions,
(iii) having acted as joint book runner for certain debt
offerings and lender under certain credit and leasing facilities
for FIS and certain of its affiliates, and (iv) having
provided or providing certain cash management, treasury and
trading services to FIS and certain of its affiliates. In
addition, a member of Banc of America Securities deal team
providing services to FIS in connection with the merger is a
former member of the FIS board of directors and is a current
member of the FNF board of directors.
In addition, Banc of America Securities and its affiliates in
the past have provided, currently are providing, and in the
future may provide investment banking, commercial banking and
other financial services to Warburg Pincus LLC and Thomas H. Lee
Partners, L.P. and certain of its portfolio companies and have
received or in the future may receive compensation for the
rendering of these services, including (i) having acted as
book runner, initial purchaser
and/or
manager for certain equity and debt offerings for certain of
Warburg Pincus LLCs or Thomas H. Lee Partners, L.P.s
portfolio companies, (ii) having acted or acting as
arranger, manager, agent bank
and/or
lender for credit facilities for certain of Warburg Pincus
LLCs or Thomas H. Lee Partners, L.P.s portfolio
companies, and (iii) having acted as financial advisor to
Warburg Pincus LLC or Thomas H. Lee Partners, L.P. and certain
of its portfolio companies in connection with certain merger and
acquisition transactions.
Furthermore, Banc of America Securities and its affiliates in
the past have provided, currently are providing, and in the
future may provide investment banking, commercial banking and
other financial services to FNF and certain of its affiliates
and have received or in the future may receive compensation for
the rendering of these services, including (i) having acted
as book runner, initial purchaser
and/or
manager for certain equity and debt offerings for FNF and
certain of its affiliates, (ii) having acted or acting as
arranger, book running manager, agent bank
and/or
lender for certain credit or leasing facilities for FNF and
certain of its affiliates, (iii) having acted as financial
advisor to FNF and certain of its affiliates in connection with
certain merger and acquisition transactions and (iv) having
provided or providing certain cash management, treasury and
trading services to FNF and certain of its affiliates.
Opinion
of Metavantes Financial Advisor
Metavante engaged Barclays Capital to act as its financial
advisor in connection with the merger. In connection with that
engagement, Metavantes board of directors requested that
Barclays Capital evaluate the fairness, from a financial point
of view, of the exchange ratio in the merger. On March 31,
2009, Barclays Capital rendered its oral opinion (which was
subsequently confirmed in writing on that date) to
Metavantes board of directors that, as of such date and
based upon and subject to the qualifications, limitations and
64
assumptions stated in its opinion, from a financial point of
view, the exchange ratio to be offered to the shareholders of
Metavante in the merger was fair to such shareholders.
The full text of Barclays Capitals written opinion, dated
as of March 31, 2009, is attached to this document as
Appendix E. Barclays Capitals written opinion sets
forth, among other things, the assumptions made, procedures
followed, factors considered and limitations upon the review
undertaken by Barclays Capital in rendering its opinion. Holders
of shares of Metavante common stock are encouraged to read the
opinion carefully in its entirety. The following is a summary of
Barclays Capitals opinion and the methodology that
Barclays Capital used to render its opinion. This summary is
qualified in its entirety by reference to the full text of the
opinion.
Barclays Capitals opinion, the issuance of which was
approved by Barclays Capitals Fairness Opinion Committee,
is addressed to the board of directors of Metavante, addresses
only the fairness, from a financial point of view, of the
exchange ratio to be offered to the shareholders of Metavante in
the merger and does not constitute a recommendation to any
shareholder of Metavante as to how such shareholder should vote
with respect to the proposed transaction or any other matter.
The terms of the proposed transaction were determined through
arms-length negotiations between Metavante and FIS and
were unanimously approved by Metavantes board of
directors. Barclays Capital did not recommend any specific form
of consideration to Metavante or that any specific form of
consideration constituted the only appropriate consideration for
the proposed transaction. Barclays Capital was not requested to
opine as to, and its opinion does not in any manner address,
Metavantes underlying business decision to proceed with or
effect the proposed transaction. In addition, Barclays Capital
expressed no opinion on, and its opinion does not in any manner
address, the fairness of the amount or the nature of any
compensation to any officers, directors or employees of any
parties to the proposed transaction, or any class of such
persons, relative to the consideration to be offered to the
shareholders of Metavante in the proposed transaction. No
limitations were imposed by Metavantes board of directors
upon Barclays Capital with respect to the investigations made or
procedures followed by it in rendering its opinion.
In arriving at its opinion, Barclays Capital, among other things:
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reviewed and analyzed a draft of the merger agreement, dated
March 31, 2009, and the specific terms of the proposed
transaction;
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reviewed and analyzed publicly available information concerning
Metavante and FIS that Barclays Capital believed to be relevant
to its analysis, including Metavantes and FIS Annual
Reports on
Form 10-K
for the fiscal year ended December 31, 2008;
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reviewed and analyzed financial and operating information with
respect to the business, operations and prospects of Metavante
furnished to Barclays Capital by Metavante, including financial
projections of Metavante prepared by management of Metavante for
the calendar years 2009 and 2010;
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reviewed and analyzed financial and operating information with
respect to the business, operations and prospects of FIS
furnished to Barclays Capital by Metavante and FIS, including
financial projections of FIS prepared by management of FIS for
the calendar years 2009 and 2010;
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reviewed and analyzed a trading history of Metavantes
common stock from November 2, 2007 through March 30,
2009 and a comparison of such trading history with (a) that
of FIS and (b) those of other companies that Barclays
Capital deemed relevant;
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reviewed and analyzed a comparison of the historical financial
results and present financial condition and financial
projections of Metavante and FIS with each other and with those
of other companies that Barclays Capital deemed relevant;
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reviewed and analyzed published estimates of independent
research analysts with respect to the future financial
performance of Metavante and FIS for the calendar years 2009 and
2010 and extrapolations of such estimates for calendar years
2011 through 2014 prepared by management of Metavante (the
street estimates);
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reviewed and analyzed a comparison of the exchange ratio
premiums of the proposed transaction with the exchange ratio
premiums of certain other recent transactions that Barclays
Capital deemed relevant;
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reviewed and analyzed the relative contributions of Metavante
and FIS to the historical and future financial performance of
the combined company on a pro forma basis;
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reviewed and analyzed the pro forma impact of the proposed
transaction on the future financial performance of the combined
company, including the specific terms of the financing of the
proposed transaction furnished to Barclays Capital by Metavante
and the amount and timing of the cost savings, operating
synergies and other strategic benefits expected by the
managements of Metavante and FIS to result from the proposed
transaction (the expected synergies);
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had discussions with the respective managements of Metavante and
FIS concerning their respective businesses, operations, assets,
liabilities, financial conditions and prospects; and
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undertook such other studies, analyses and investigations as
Barclays Capital deemed appropriate.
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In arriving at its opinion, Barclays Capital assumed and relied
upon the accuracy and completeness of the financial and other
information used by Barclays Capital without any independent
verification of such information and further relied upon the
assurances of the respective managements of Metavante and FIS
that they were not aware of any facts or circumstances that
would make such information inaccurate or misleading. With
respect to the financial projections of Metavante and of FIS,
upon the advice of Metavante, Barclays Capital assumed that such
projections were reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the
applicable management of Metavante and FIS as to the future
financial performance of Metavante and FIS. For purposes of its
analysis, however, upon advice of Metavante, Barclays Capital
assumed that the street estimates were a reasonable basis upon
which to evaluate the future financial performance of Metavante
and FIS and that each of Metavante and FIS would perform
substantially in accordance with the street estimates.
Furthermore, upon advice of Metavante, Barclays Capital assumed
that the amounts and timing of the expected synergies were
reasonable and that the expected synergies would be realized in
accordance with such estimates. Barclays Capital assumed no
responsibility for and expressed no view as to any such
projections or estimates or the assumptions on which they were
based. In arriving at its opinion, Barclays Capital did not
conduct a physical inspection of the properties and facilities
of Metavante or FIS and did not make or obtain any evaluations
or appraisals of the assets or liabilities of Metavante or FIS.
In addition, Barclays Capital was not authorized by Metavante to
solicit, and did not solicit, any indications of interest from
any third party with respect to the purchase of all or a part of
Metavantes business. Barclays Capitals opinion was
necessarily based upon market, economic and other conditions as
they existed on, and could be evaluated as of, March 31,
2009. Barclays Capital assumed no responsibility for updating or
revising its opinion based on events or circumstances that may
have occurred after, March 31, 2009.
Barclays Capital expressed no opinion as to the prices at which
shares of common stock of Metavante would trade following the
announcement of the merger or shares of common stock of FIS
would trade following the announcement or consummation of the
merger. Barclays Capitals opinion should not be viewed as
providing any assurance that the market value of the shares of
common stock of FIS to be held by the shareholders of Metavante
after the consummation of the proposed transaction will be in
excess of the market value of common stock of Metavante owned by
such shareholders at any time prior to the announcement or
consummation of the merger.
In rendering its opinion, Barclays Capital assumed that the
final form of the merger agreement would be substantially
similar to the last draft reviewed by it and that the proposed
transaction would be consummated in accordance with the terms
thereof, without any waiver or modification of any material
terms or conditions of the merger agreement by Metavante.
Barclays Capital understood that concurrent with the merger, the
equity capital investment (or a comparable transaction) would
occur. As a result, in rendering its opinion Barclays Capital
also assumed that the equity capital investment would occur and
be consummated in accordance with the terms (i) set forth
in the draft investment agreement, dated as of March 31,
2009, by and between FIS and the investors named therein and
(ii) previously described to Barclays Capital by Metavante
management. In addition, Barclays Capital assumed the accuracy
of the representations and warranties
66
contained in the merger agreement and all agreements related
thereto. Barclays Capital also assumed that in the course of
obtaining the financing and the necessary regulatory or third
party approvals, consents and releases for the merger, no delay,
limitation, restriction or condition would be imposed that would
have an adverse effect on the parties or the contemplated
benefits of the merger. Barclays Capital did not express any
opinion as to any tax or other consequences that might result
from the merger, nor did its opinion address any legal, tax,
regulatory or accounting matters, as to which it understood that
Metavante obtained such advice as it deemed necessary from
qualified professionals.
In connection with rendering its opinion, Barclays Capital
performed certain financial, comparative and other analyses as
summarized below. In arriving at its opinion, Barclays Capital
did not ascribe a specific range of values to the shares of
Metavante common stock but rather made its determination as to
fairness, from a financial point of view, to Metavantes
shareholders of the exchange ratio to be offered in the merger
to such shareholders in the proposed transaction on the basis of
various financial and comparative analyses. The preparation of a
fairness opinion is a complex process and involves various
determinations as to the most appropriate and relevant methods
of financial and comparative analyses and the application of
those methods to the particular circumstances. Therefore, a
fairness opinion is not readily susceptible to summary
description.
In arriving at its opinion, Barclays Capital did not attribute
any particular weight to any single analysis or factor
considered by it but rather made qualitative judgments as to the
significance and relevance of each analysis and factor relative
to all other analyses and factors performed and considered by it
and in the context of the circumstances of the particular
transaction. Accordingly, Barclays Capital believes that its
analyses must be considered as a whole, as considering any
portion of such analyses and factors, without considering all
analyses and factors as a whole, could create a misleading or
incomplete view of the process underlying its opinion.
The following is a summary of the material financial analyses
used by Barclays Capital in preparing its opinion to
Metavantes board of directors and does not purport to be a
complete description of the analysis undertaken by Barclays
Capital. Certain financial analyses summarized below include
information presented in tabular format. In order to fully
understand the financial analyses used by Barclays Capital, the
tables must be read together with the text of each summary, as
the tables alone do not constitute a complete description of the
financial analyses. In performing its analyses, Barclays Capital
made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many
of which are beyond the control of Metavante or any other
parties to the proposed transaction. None of Metavante, FIS,
Merger Sub, Barclays Capital or any other person assumes
responsibility if future results are materially different from
those discussed. Any estimates contained in these analyses are
not necessarily indicative of actual values or predictive of
future results or values, which may be significantly more or
less favorable than as set forth below. In addition, analyses
relating to the value of the businesses do not purport to be
appraisals or reflect the prices at which the businesses may
actually be sold.
Historical
Share Price Analysis
Although Barclays Capital presented trading data to
Metavantes board of directors for the period from
October 29, 2007 to November 1, 2007, during which
time Metavantes stock was trading on a when
issued basis, to illustrate the trend in the historical
trading prices of Metavante common stock, Barclays Capital
considered historical data with regard to the trading prices of
Metavante common stock for the period from November 2, 2007
to March 30, 2009 and compared such data with the relative
stock price performances during the same periods of FIS (as
adjusted prior to July 3, 2008 for a dividend of $16.50
paid in connection with the spin-off of its Lender Processing
Services operating segment), the Nasdaq Global Market and a
composite of the selected companies listed under the caption
Selected Comparable Company Analysis below.
Barclays Capital noted that during the period from
November 2, 2007 to March 30, 2009, the closing price
(defined as the last price at which a stock trades during a
regular trading session) of Metavante common stock decreased
31.9%, compared to a decrease of 29.7% in the closing price of
FIS common stock, a decrease
67
of 46.7% in the Nasdaq Global Market and a decrease of 42.8% in
the composite closing price of the stock of the selected
companies listed under the caption Selected Comparable
Company Analysis below.
Historical
Exchange Ratio Analysis
In order to assess the range of implied exchange ratios of
Metavante common stock to FIS common stock during certain recent
time periods, Barclays Capital compared the historical closing
prices of Metavante common stock and FIS common stock (as
adjusted prior to July 3, 2008 for a dividend of $16.50
paid in connection with the spin-off of its Lender Processing
Services operating segment) for various periods since
November 2, 2007 (although Barclays Capital presented
trading data to Metavantes board of directors for the
period from October 29, 2007 to November 1, 2007,
during which time Metavantes stock was trading on a
when issued basis). Based on these implied exchange
ratios, Barclays Capital also reviewed the premium implied by
each such exchange ratio as compared to the exchange ratio to be
offered in the merger. The results of the historical exchange
ratio analysis are summarized below:
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Premium at Exchange
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Average Exchange Ratio
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Ratio of 1.3500x
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Current (March 30, 2009)
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1.0898
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x
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23.9
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%
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7-Calendar
Days
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1.0865
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x
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24.3
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%
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30-Calendar
Days
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1.0503
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x
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28.5
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%
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60-Calendar
Days
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0.9999
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x
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35.0
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%
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90-Calendar
Days
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0.9808
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x
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37.6
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%
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180-Calendar
Days
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0.9861
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x
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36.9
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%
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Barclays Capital noted that on the basis of the historical
exchange ratio analysis, the exchange ratio to be offered in the
merger was above the implied exchange ratio as of March 30,
2009 and the average implied exchange ratios for the most recent
7-calendar
day,
30-calendar
day,
60-calendar
day,
90-calendar
day and
180-calendar
day periods.
Contribution
Analysis
Barclays Capital analyzed the respective contributions of
Metavante and FIS to earnings before interest, taxes,
depreciation and amortization, or EBITDA, and cash net income of
the combined company for calendar years 2008, 2009 and 2010. The
calendar year 2009 and 2010 analysis was based upon the street
estimates. The relative EBITDA contributions of each of
Metavante and FIS were then multiplied by an amount equal to
FIS enterprise value (assuming completion of the equity
capital investment) divided by FIS EBITDA contribution in
order to calculate the implied enterprise value of each company.
The implied enterprise values of each company were then adjusted
by each companys respective estimated net debt (which was
$1,484 million in the case of Metavante (including a
$15.4 million minority interest) and $2,208 million in
the case of FIS (including a $164.4 million minority
interest and assuming an Investment in the amount of
$250 million)) in order to calculate an implied equity
value for each company. Similarly, the relative cash net income
(defined as GAAP net income excluding amortization of acquired
intangibles as an expense and onetime non-recurring expenses but
including stock based compensation as an expense) contributions
of each of Metavante and FIS (which assumed an Investment in the
amount of $250 million for calendar years 2009 and
2010) were multiplied by an amount equal to FIS
equity value (assuming an Investment in the amount of
$250 million) divided by FIS current cash net income
contribution in order to calculate the implied equity value of
each company. Based on the implied equity values calculated
using both EBITDA and cash net income contribution, Barclays
Capital then calculated the implied equity ownership percentages
of each of
68
Metavante and FIS of the combined company. This analysis
indicated the following contribution percentages and implied
equity ownership of Metavante and FIS to the combined company:
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Percent Implied Equity
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Percent Contribution
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Ownership
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Metavante
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FIS
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Metavante
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FIS
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EBITDA
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CY2008A
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36.8
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%
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63.2
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%
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34.6
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%
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65.4
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%
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CY2009E
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37.7
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%
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62.3
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%
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36.1
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%
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63.9
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%
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CY2010E
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37.3
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%
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62.7
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%
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35.4
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%
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64.6
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%
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Cash Net Income
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CY2008A
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36.5
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%
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63.5
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%
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36.5
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%
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63.5
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%
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CY2009E
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37.0
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%
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63.0
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%
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37.0
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%
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63.0
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%
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CY2010E
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36.7
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%
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63.3
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%
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36.7
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%
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63.3
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%
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Based on the contribution analysis and assuming completion of
the equity capital contribution, Barclays Capital calculated a
range of implied exchange ratios of Metavante equity value per
share to FIS equity value per share of 0.9264x to 0.9888x for
EBITDA for calendar years 2008 to 2010 and 1.0071x to 1.0279x
for cash net income for calendar years 2008 to 2010. Barclays
Capital noted that, based upon this contribution analysis, the
exchange ratio to be offered in the merger was above these
ranges of implied exchange ratios.
Selected
Comparable Company Analysis
In order to assess how the public market values shares of
similar publicly traded companies, Barclays Capital reviewed and
compared specific financial and operating data relating to
Metavante with selected companies that Barclays Capital, based
on its experience in the transaction processing industry, deemed
comparable to Metavante. The selected comparable companies were:
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Fiserv Inc.;
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Global Payments, Inc.;
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Heartland Payment Systems, Inc.;
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Jack Henry & Associates, Inc.;
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Online Resources Corporation; and
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Total System Services, Inc.
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Barclays Capital calculated and compared various financial
multiples and ratios of Metavante, FIS and the selected
comparable companies. As part of its selected comparable company
analysis, Barclays Capital calculated and analyzed (i) each
companys ratio of its current stock price to its estimated
earnings per share, or EPS, for the 2009 calendar year (commonly
referred to as a price earnings ratio, or P/E), which
calculations excluded amortization of acquired intangibles as an
expense but included stock based compensation as an expense, and
(ii) each companys enterprise value to estimated
EBITDA for the 2009 calendar year, which calculations included
stock based compensation as an expense. The enterprise value of
each company was obtained by adding its short and long-term debt
(which included a $15.4 million minority interest, in the
case of Metavante, and a $164.4 million minority interest,
in the case of FIS) to the sum of the market value of its common
stock and subtracting its cash and cash equivalents. All of
these calculations were performed based on the consensus of
independent research analysts earnings estimates compiled by
I/B/E/S at that time including stock based compensation as an
expense and excluding amortization of acquired intangibles as an
69
expense and closing prices as of March 30, 2009, the last
trading date prior to the delivery of Barclays Capitals
opinion. The results of this selected comparable company
analysis are summarized below:
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Stock Price as a
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Enterprise Value as a
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Multiple of CY2009E
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Multiple of CY2009E
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EPS
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EBITDA
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Metavante
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12.6
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x
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7.3
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x
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FIS
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11.0
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x
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6.9
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x
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Fiserv Inc.
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9.7
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x
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7.4
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x
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Global Payments, Inc.
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14.2
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x
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6.5
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x
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Heartland Payment Systems, Inc.
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5.6
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x
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2.9
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x
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Jack Henry & Associates, Inc.
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12.8
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x
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6.0
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x
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Online Resources Corporation
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22.5
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x
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6.7
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x
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Total System Services, Inc.
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10.9
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x
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5.1
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x
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Barclays Capital selected the comparable companies listed above
because their businesses and operating profiles are reasonably
similar to that of Metavante. However, because of the inherent
differences between the business, operations and prospects of
Metavante, FIS and those of the selected comparable companies,
Barclays Capital believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of
the selected comparable company analysis. Accordingly, Barclays
Capital also made qualitative judgments concerning differences
between the business, financial and operating characteristics
and prospects of Metavante, FIS and the selected comparable
companies that could affect the public trading values of each in
order to provide a context in which to consider the results of
the quantitative analysis. These qualitative judgments related
primarily to the differing sizes, growth prospects,
profitability levels and degree of operational risk between
Metavante, FIS and the companies included in the selected
company analysis. Based upon these judgments and assuming the
completion of the equity capital investment, Barclays Capital
selected a range of 6.5x to 7.5x multiples of 2009 calendar year
estimated EBITDA and 9.5x to 13.0x multiples of 2009 calendar
year estimated EPS and applied such ranges to Metavante and FIS
management projections to calculate a range of implied equity
values per share of Metavante common stock and FIS common stock
which were then used to calculate a range of implied exchange
ratios. The following summarizes the result of these
calculations:
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Implied Exchange Ratio
|
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Enterprise Value as a Multiple of CY2009E EBITDA
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0.7938x 1.2587
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x
|
Stock Price as a Multiple of CY2009E EPS
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|
0.7466x 1.3981
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x
|
Barclays Capital noted that on the basis of the selected
comparable company analysis, the exchange ratio to be offered in
the merger was above the range of implied exchange ratios per
share calculated using estimated 2009 calendar year EBITDA and
within the range of implied exchange ratios per share calculated
using estimated 2009 calendar year EPS.
Discounted
Cash Flow Analysis
Barclays Capital performed a discounted cash flow analysis of
Metavante and FIS. A discounted cash flow analysis is a
traditional valuation methodology used to derive a valuation of
an asset by calculating the present value of
estimated future cash flows of the asset. Present
value refers to the current value of future cash flows or
amounts and is obtained by discounting those future cash flows
or amounts by a discount rate that takes into account
macroeconomic assumptions and estimates of risk, the opportunity
cost of capital, expected returns and other appropriate factors.
To calculate the estimated enterprise value of Metavante common
stock and FIS common stock using the discounted cash flow
method, Barclays Capital added (i) projected after-tax
unlevered free cash flows of each of Metavante and FIS for
fiscal years 2009 through 2013 based on the street estimates to
(ii) the terminal value of each of Metavante
and FIS as of December 31, 2013, and discounted such amount
to its present value using a range of selected discount rates.
The after-tax unlevered free cash flows were calculated by
70
taking the tax-affected earnings before interest and tax expense
(excluding amortization of purchased intangibles), adding
depreciation and amortization and stock based compensation
expense and subtracting capital expenditures and changes in
working capital. The residual value of each of Metavante and FIS
at the end of the forecast period, or terminal
value, was estimated by selecting a range of terminal
value multiples based on EBITDA for the fiscal year ending
December 31, 2014 of 6.5x to 7.5x and applying such range
to the street estimates. The range of after-tax discount rates
of 7.0% to 11.0% was selected based on an analysis of the
weighted average cost of capital of Metavante and FIS.
Based upon these terminal values and discount rates and assuming
completion of the equity capital investment, Barclays Capital
then calculated a range of implied equity values per share of
Metavante common stock and FIS common stock, which were then
used to calculate a range of implied exchange ratios. Based on
these implied per share values, this analysis indicated an
implied exchange ratio range of 0.6927x to 1.4354x. Barclays
Capital noted that on the basis of the discounted cash flow
analysis, the Exchange Ratio was within the range of implied
exchange ratios per share calculated using the street estimates.
Transaction
Premium Analysis
In order to assess the premium offered to the shareholders of
Metavante in merger relative to the premiums offered to
shareholders in other transactions, Barclays Capital reviewed
the premium paid in all U.S. domestic all-stock M&A
transactions valued between $1.5 billion and
$5 billion from January 1, 2004 to March 30,
2009. For each transaction, Barclays Capital calculated the
premium per share paid by the acquirer by comparing the
announced transaction value per share to the target
companys historical average share price during the
following periods: (i) one trading day prior to
announcement, and (ii) 30 calendar days prior to
announcement. The results of this transaction premium analysis
are summarized below:
|
|
|
|
|
|
|
|
|
|
|
One Trading
|
|
|
30-Calendar
|
|
|
|
Day
|
|
|
Day Average
|
|
|
3rd Quartile
|
|
|
8.4
|
%
|
|
|
9.3
|
%
|
Median
|
|
|
15.3
|
%
|
|
|
19.4
|
%
|
1st Quartile
|
|
|
32.8
|
%
|
|
|
32.7
|
%
|
The reasons for and the circumstances surrounding each of the
transactions analyzed in the transaction premium analysis were
diverse and there are inherent differences in the business,
operations, financial conditions and prospects of Metavante and
the companies included in the transaction premium analysis.
Accordingly, Barclays Capital believed that a purely
quantitative transaction premium analysis would not be
particularly meaningful in the context of considering the
proposed transaction. Barclays Capital therefore made
qualitative judgments concerning the differences between the
characteristics of the selected transactions and the proposed
transaction which would affect the acquisition values of the
target companies and Metavante. Based upon these judgments,
Barclays Capital selected a range of 10.0% to 35.0%
1-day
premiums paid and 10.0% to 35.0%
30-day
premiums paid to calculate a range of implied exchange ratios of
Metavante equity value per share to FIS equity value per share
of 1.1988x to 1.4712x for the
1-day
premiums paid and 1.1554x to 1.4180x for the
30-day
premiums paid.
Barclays Capital noted that on the basis of the transaction
premium analysis, the exchange ratio to be offered in the merger
was within both of these ranges of implied exchange ratios.
Barclays Capital is an internationally recognized investment
banking firm and, as part of its investment banking activities,
is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
investments for passive and control purposes, negotiated
underwritings, competitive bids, secondary distributions of
listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
Metavantes board of directors selected Barclays Capital
because of its familiarity with Metavante and its
qualifications, reputation and experience in the valuation of
businesses and securities in connection with mergers and
acquisitions generally, as well as substantial experience in
transactions comparable to the proposed transaction.
71
Barclays Capital is acting as financial advisor to Metavante in
connection with the merger. As compensation for its services,
Metavante agreed to pay Barclays Capital a fee of
$2 million in connection with the delivery of Barclays
Capitals opinion and a fee of $18 million (less any
amounts paid in connection with the opinion) payable upon
completion of the merger. In addition, Metavante has agreed to
reimburse Barclays Capital for its reasonable out-of-pocket
expenses incurred in connection with the proposed transaction
and to indemnify Barclays Capital for certain liabilities that
may arise out of its engagement by Metavante and the rendering
of Barclays Capitals opinion. Barclays Capital expects to
perform various investment banking and financial services for
the combined company in the future and expects to receive
customary fees for such services. In addition, an affiliate of
Barclays Capital may assume a portion of the financing
commitments relating to an asset-backed revolving credit
facility of FIS, which facility may be entered into in
connection with the consummation of the merger. In the event
that its affiliate assumes such financing commitments, Barclays
Capital expects such affiliate to receive customary fees in
connection therewith. In addition, Barclays Capital has
performed various investment banking and financial services for
Warburg Pincus and its affiliates in the past, and is likely to
perform such services in the future, and has received, and is
likely to receive, customary fees for such services.
Barclays Capital is a full service securities firm engaged in a
wide range of businesses from investment and commercial banking,
lending, asset management and other financial and non-financial
services. In the ordinary course of its business, Barclays
Capital and affiliates may actively trade and effective
transactions in the equity, debt
and/or other
securities (and any derivatives thereof) and financial
instruments (including loans and other obligati