ACI Worldwide to acquire S1 Corporation

ACI Worldwide, Inc. and S1 Corporation today announced that they have entered into a definitive transaction agreement that will create a full-service global leader of financial and payments solutions.
Under the agreement, ACI will acquire S1 for a blended value of $9.55 per share as of September 30, 2011, consisting of $6.62 per share in cash and 0.1064 shares of ACI common stock, assuming full proration, which represents an increase of $0.42 per share in cash from ACIs previous offer. The boards of directors of both companies have approved the transaction.

We are pleased to have reached this agreement with S1, and believe that together we will create a leader in the global enterprise payments industry, said Philip G. Heasley, President and Chief Executive Officer of ACI. The combined company will have enhanced scale, breadth and additional capabilities, as well as a complementary suite of products that will better serve the entire spectrum of financial institutions, processors and retailers. Stockholders of both companies will benefit from the significant upside potential of a larger, more diversified company that is strongly positioned in a wide range of markets.

Continued Mr. Heasley, S1 has a loyal and committed workforce, which will be a great complement to our own employee base.  We believe that the size, scope, geographic reach and expanded technical expertise of the combined company will offer even greater opportunities to our employees world-wide.  In addition, S1s products and rich set of capabilities will further enhance our existing offerings.  We look forward to working with S1 to complete this acquisition in order to build a greater company for our customers and employees and to deliver enhanced results to stockholders.

With the significant improvements in the transaction terms and conditions, S1s Board of Directors unanimously concluded that combining with ACI is in the best interests of S1s stockholders, as it provides a substantial premium for their investment and the opportunity to participate further in this powerful combination, said John W. Spiegel, Chairman of the Board of Directors of S1.  On behalf of S1s Board and management team, I would like to thank our customers for their ongoing support and express our deep appreciation to our employees, whose hard work and dedication has been instrumental in making S1 the outstanding company it is today.

Complementary Offerings and Global Platform to Drive Long-Term Value Creation

Highly Complementary Products and Solutions:  Following the close of the transaction, the combined company will be a full-service global leader of financial and payments solutions with significant scale.  ACIs and S1s products are highly complementary and ACI expects to leverage S1s success with a range of financial institutions and retailers, as well as S1s strong global capabilities.  The combined company will be well positioned to address both emerging and developed payments markets, and will provide a rich set of capabilities across the most unified payments solution to serve Retail Banking, Wholesale Banking, Processors and Retailers.  The combined company will remain focused on delivering business agility without compromising the trust of its combined customers.

Significant Synergy Opportunities and Financial Strength: The pro forma financial implications of the transaction are compelling.  ACI anticipates that with S1 it will achieve annual cost synergies of approximately $30 million. In addition, the increased global scale and expected cost savings are expected to generate margin expansion. The transaction is expected to be accretive to full year earnings in 2012.

For the last twelve months ending June 30, 2011, the companies generated pro forma combined revenue of $683 million, adjusted EBITDA of $123 million and free cash flow of $90 million.  The combined company is expected to have a strong financial profile, including a solid balance sheet with substantial liquidity.  ACI will have a robust liquidity position with more than $150 million of combined cash remaining on the balance sheet and more than $65 million of availability under a new credit facility at closing.  This ample liquidity and high free cash flow generation are expected to support long-term growth.

Terms of the Transaction

ACI will acquire S1 for approximately $360 million in cash and 5.8 million ACI shares.  Under the terms of the transaction, S1 stockholders can elect to receive $10.00 in cash or 0.3148 shares of ACI stock for each S1 share they own, subject to proration, such that in the aggregate 33.8% of S1 shares are exchanged for ACI shares and 66.2% are exchanged for cash.

ACI will amend its pending exchange offer to reflect the terms of the definitive agreement.  The complete terms and conditions of the exchange offer will be set forth in the amended prospectus/offer to exchange on Form S-4 that ACI expects to file with the Securities and Exchange Commission (the SEC) by October 13, 2011.

Based on the closing sales price of ACI common stock on September 30, 2011, the blended value of ACIs proposal is $9.55 per S1 share, assuming full proration.  However, the equity capital markets have been highly volatile since July 26, 2011 and market prices for ACI shares and S1 shares have fluctuated and can be expected to continue to fluctuate. S1 stockholders are urged to obtain current trading price information prior to making any decision with respect to the exchange offer.
 
S1s Board of Directors recommends that all S1 stockholders tender their shares into ACIs amended exchange offer.  ACI had previously extended the expiration date of the exchange offer to 5:00 p.m. Eastern Time on October 31, 2011, unless further extended.

Stockholder questions regarding the exchange offer or requests for offering documents should be directed to ACIs Information Agent for the exchange offer, Innisfree M&A Incorporated, toll-free at (888) 750-5834. Offering materials will also be available on the SECs website at www.sec.gov. S1 stockholders are urged to read the offering materials filed by ACI, as well as materials filed by S1 relating to the exchange offer, which contain important information about the exchange offer.
2011 Guidance

ACI and S1 reiterate the respective guidance each had previously provided, excluding the impact of the transaction, for 2011.  ACI will update its guidance to include the acquisition of S1 following the completion of the transaction.
Approvals and Timing

ACI has received fully committed financing for the cash portion of the transaction from a syndicate of banks led by Wells Fargo Bank, N.A.  The transaction is subject to satisfaction of customary closing conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the fourth quarter of 2011.
Advisors

Wells Fargo Securities is serving as financial advisor to ACI, and Jones Day is serving as its legal advisor.  Raymond James & Associates Inc. is serving as financial advisor to S1, and Hogan Lovells US LLP is serving as its legal advisor.

About ACI Worldwide

aci_newlogo.jpgACI Worldwide powers electronic payments for more than 800 financial institutions, retailers and processors around the world, with its broad and integrated suite of electronic payment software. More than 90 billion times each year, ACIs solutions process consumer payments. On an average day, ACI software manages more than US$12 trillion in wholesale payments.  And for more than 160 organizations worldwide, ACI software helps to protect their customers from financial crime.

About S1 Corporation

s1.jpgLeading banks, credit unions, retailers, and processors need technology that adapts to the complex and challenging needs of their businesses. These organizations want solutions that can respond quickly to changes in the marketplace and help grow their businesses. For more than 20 years, S1 Corporation (Nasdaq:SONE) has been a leader in developing software products that offer flexibility and reliability. Over 3,000 organizations worldwide depend on S1 for payments, online banking, mobile banking, voice banking, branch banking and lending solutions that deliver a competitive advantage.
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