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Business Combination
6 Months Ended
Jun. 30, 2011
Business Combination [Abstract]  
BUSINESS COMBINATION
3. BUSINESS COMBINATION
On June 26, 2011, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Finland Holdings (2011) Ltd. (“Merger Sub”), a company organized under the laws of Israel and a wholly owned direct subsidiary of S1, and Fundtech Ltd., a company organized under the laws of Israel (“Fundtech”). Pursuant to the terms of the Merger Agreement, which have been approved by the boards of directors of S1, Merger Sub and Fundtech, Merger Sub will be merged with and into Fundtech, with Fundtech surviving the merger and becoming a wholly owned subsidiary of S1 (the “Merger”).
Under the terms and conditions of the Merger Agreement, at the effective time and as a result of the Merger, each ordinary share of Fundtech issued and outstanding immediately prior to the effective time of the Merger will be automatically converted into 2.72 shares (the “Exchange Ratio”) of S1’s common stock. Based on the number of outstanding shares of common stock of S1 and ordinary shares of Fundtech, S1’s stockholders immediately prior to the effective time and Fundtech shareholders immediately prior to the effective time are expected to hold approximately 55% and 45%, respectively, of the outstanding shares of the combined company following the Merger.
The Merger Agreement contains customary covenants, representations and warranties of the parties, including, among others, a covenant by each of S1 and Fundtech to conduct its respective business in the ordinary course during the interim period between the execution of the Merger Agreement and consummation of the Merger and not to engage in certain kinds of activities during such period. Each of S1 and Fundtech has agreed not to (i) solicit proposals relating to alternative business combination transactions or (ii) enter into discussions or negotiations or an agreement concerning, or provide confidential information in connection with, any alternative proposals for alternative business combination transactions. Each of these covenants is subject to exceptions as provided in the Merger Agreement.
The Merger is expected to close in the fourth quarter of 2011 and consummation of the Merger is subject to a number of conditions, including, but not limited to (i) the approval by the stockholders of S1 of the issuance of the shares of common stock of S1 to the shareholders of Fundtech in connection with the transaction (the “Share Issuance Approval”); (ii) the approval by the stockholders of S1 of the amendment to the certificate of incorporation of S1 to change S1’s name to “Fundtech Corporation” (the “Certificate Amendment Approval,” and, together with the Share Issuance Approval, the “S1 Stockholder Approval”); (iii) the approval of the Merger Agreement by the shareholders and, if necessary, the creditors of Fundtech; (iv) the receipt of all required regulatory approvals, including approvals from the district court of Tel Aviv-Jaffa (the “Court Approval”) and certain Israeli governmental entities; (v) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other regulatory approvals; and (vi) the absence of a material adverse effect on either party.
The Merger Agreement contains certain termination rights and provides that upon the termination of the Merger Agreement under specified circumstances, including a change in the recommendation of Fundtech’s board of directors, Fundtech will pay S1 a cash termination fee of $11.9 million. Similarly, in certain circumstances, including a change in the recommendation of S1’s board of directors, S1 will pay to Fundtech a cash termination fee of $14.6 million. Additionally, if the Court Approval is not obtained in certain circumstances, Fundtech is required to pay $3.0 million to S1. Similarly, if the S1 Stockholder Approval is not obtained in certain circumstances, S1 is required to pay $3.0 million to Fundtech.
Refer to the proxy statement, filed with the SEC by S1 on August 3, 2011, for a more complete description of the Merger and related agreements.