SS&C Technologies Holdings Inc (SSNC.O) is in advanced talks to acquire DST Systems Inc (DST.N) for more than $5 billion, as it seeks to expand its footprint in financial technology software, people familiar with the matter said on Wednesday.
The deal would bolster SS&C’s offerings in technology infrastructure servicing financial institutions such as asset managers, but would also allow it to enter the healthcare information technology market, in which DST is active.
SS&C is negotiating acquiring DST for around $84 per share in cash, the sources said. If the negotiations are successful, the deal could be announced as early as this week, the sources added, asking not to be identified because the matter is confidential. There is always a chance the deal talks end unsuccessfully, the sources added.
SS&C and DST did not immediately respond to requests for comment.
DST shares jumped 23 percent on the news to $80.68, giving it a market capitalization of $4.8 billion. SS&C shares rose 11 percent to $46.78 per share.
SS&C, which is based in Windsor, Connecticut, and has a market capitalization of close to $9 billion, has been acquisitive over the years building out its financial technology software expertise that serves banks and the investment industry. DST would be SS&C’s largest deal to date and its first big acquisition since its $2.3 billion takeover of Advent Software in 2015.
“Acquisitions have been a key part of SS&C’s growth story. DST, with roughly 80 percent of revenue stemming from investment fund data processing and fund administration, would seem to be a good fit,” Peter Heckman, research analyst at D.A. Davidson, said in an email.
Heckman added that SS&C, which has $103 million in cash and $2.26 billion in debt, would need to borrow more to make the deal happen, but he expects cost savings and potential divestitures to help.
An $84 per share offer by SS&C represents a 29 percent premium to DST’s closing share price on Tuesday.
SS&C and DST have had dealings in the past. In 2014, DST sold its global solutions unit to SS&C for $95 million in cash.