Market Round Up: Takeover talks back on for Misys

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Misys, which specialises in providing software to financial services firms, said it is "in preliminary discussions" about the all-share deal.

FTSE 250-listed Misys, led by chief executive Mike Lawrie, has been the subject of on-off takeover discussions for months, after FIS Global made an abortive approach last summer.

Analysts reacted cautiously. Misys shares, which have risen 40% on bid speculation in the last six months, slipped 2.9p or 0.89% to 322.7p.

George O'Connor at broker Panmure Gordon said: "It was probably someone in corporate finance who cooked this one up."

He said that Temenos wants to expand in the US, where Misys has a slim 18% of revenue and "Misys wants to do 'something'."

He added: "Operationally, the phrase 'buggers muddle' springs to mind in terms of the difficulties in banging these businesses together."

O'Connor rates Misys a buy because of a possible counter-bid from FIS although he is far from sure that will materialise. Roger Phillips, at broker Merchant Securities, was also sceptical about FIS after it ended talks last summer. "FIS investor reaction was negative to the deal at the time and we think would be even worse now; hence we do not see this happening," he said.

Misys is worth £1.1 billion and Temenos around £900 million.