LONDON, July 21, 2011 – Patsystems is pleased to announce that it has entered into a conditional agreement to acquire MIXIT Inc., a US based developer and vendor of sell-side Order Management Systems (OMS) and Execution Management Systems (EMS) for equities and options trading (the "Acquisition").
Benefits of the Acquisition include:
- adds further product and asset classes to the Group, particularly equities;
- increases scale in structurally growing market;
- increases Group percentage of recurring revenue;
- opportunity for revenue synergies from cross selling MIXIT product through Patsystems' international sales network;
- routing of MIXIT customers' futures trades to Patsystems' global network of derivatives market connections; and
- the acquisition is expected to be earnings accretive in first full financial year of ownership.
David Webber, Chief Executive of Patsystems, commented:
"MIXIT has rapidly established itself as a significant vendor in the North American equities OMS market. I am excited by the growth opportunities that the Group will see from repeating MIXIT's success globally and leveraging the combined strengths of our technology and connectivity offerings."
Walter Fitzgerald, President & Chief Executive Officer of MIXIT, commented:
"We are extremely excited to be joining Patsystems. The combination of these two complementary, industry-leading technology firms creates a powerful global offering of products and services. Our mutual customers will benefit from the broad range of products, an international presence, and our combined
strength. Patsystems' existing global footprint along with MIXIT's extensive network provides the infrastructure for our products to be distributed seamlessly worldwide and offer clients access to global multi-asset electronic trading technology."
1. Introduction and summary
The Board is pleased to announce that Patsystems has entered into a conditional agreement to acquire MIXIT, Inc ("MIXIT"). MIXIT is a US based developer and vendor of sell-side Order Management Systems (OMS) and Execution Management Systems (EMS) for equities and options trading. The Directors believe that MIXIT is a high quality business that is well positioned competitively in its market and that has shown significant growth (approximately 37 per cent. revenue CAGR in the three years ending 31 March 2011).
The Directors believe that the Acquisition represents an important step in delivering upon the Group's strategy and that the Acquisition, once completed, will add further product and asset classes to the Group supported by trading, risk and exchange systems and increase Group scale to take further advantage of operational leverage and position in its markets.
2. Information on MIXIT
MIXIT is a software developer and vendor providing a broker-neutral, multi-asset trading platform offering a market leading Order/Execution Management System (OMS/EMS), an extensive network of connectivity, middle office and compliance solutions to the financial services industry.
MIXIT was founded in 2004 by members of the existing core management team who are also the principal vendors. Those founders still active in the business will remain with the enlarged group following the Acquisition.
MIXIT has an integrated suite of technology that supports institutional and broker-to-broker-based trading across Equities and Options. The MIXIT routing network encompasses all major buy side; Algorithms, Exchanges, Brokers, Crossing Venues, and Dark Pools. MIXIT provides scalable electronic, real-time trading solutions, including Front, Middle, and Back-Office products, in addition to Compliance offerings.
MIXIT currently has approximately 170 customers, with approximately 800 OMS workstation and 2,500 Financial Information eXchange protocol ("FIX") connections. MIXIT's customers are financial institutions and include investment banks, brokers, hedge funds and asset managers ranging from global financial institutions to smaller start-up brokerages. The majority of MIXIT customers are based in US. Sales are
conducted by a direct sales team and via resellers.
MIXIT's principal competitors in the OMS space are considered by MIXIT to be Fidessa, Sungard, Bloomberg and Flextrade. The Directors believe that attractions of the MIXIT product and service offering include broker neutrality; a relatively fast time to deployment; the capability for electronic paperless
options order acceptance and execution with support for managing and executing complex multi leg options; a low cost of ownership for customers with a hosted scalable and modular deployment model.
The Directors believe that there are considerable growth opportunities for MIXIT. In particular, the Directors believe that the key medium and longer term growth drivers for the MIXIT product set include:
- continued growth in the OMS/EMS market;
- further traction for the industry leading MIXIT option product offering;
- market regulation (and deregulation);
- expansion of MIXIT's reseller sales channel;
- an increase in the number of larger MIXIT customers;
- penetration into other North and South American markets (Canada and Brazil)
- the addition of equity and options execution venues outside of North America;
- routing of MIXIT customer's futures trades to Patsystems' global network of futures market connections;
- the promotion of MIXIT's services and products through Patsystems' global network; and
- opportunities for the sale of Patsystems products, such as Risk Informer into the MIXIT customer base.
The Directors believe that the key strengths of MIXIT include:
- a solid, modular and scalable product;
- excellent revenue visibility arising from a high level of recurring revenue;
- substantial growth prospects;
- a track record of strong revenue growth;
- potential for significant margin enhancement;
- strong cash conversion and cash generation profile; and
- an attractive customer profile.
3. Benefits of the Acquisition
The Directors believe that the acquisition represents an important step in delivering on Patsystems stated strategy for growing the Patsystems business and, in particular, that once completed the Acquisition will:
- increase the number of asset classes supported by trading and exchange systems;
- increase the percentage of Group recurring revenue;
- increase the scale of the Group to take advantage of operational leverage and positioning in a structurally growing market;
- provide the potential for significant revenue synergies through the distribution of MIXIT product and services through Patsystems' global sales network and opportunities for Patsystems products and services within the MIXIT customer base; and
- strong positioning in relation to the enlarged groups competitors.
In addition, the Directors believe that the Acquisition represents a suitable use of cash to invest in the long term future of the business. Once completed the Acquisition is expected to be earnings enhancing in the first full financial year of ownership excluding deal costs and goodwill amortisation.