SS&C Technology Holdings has reached an agreement to acquire DST Systems in a deal worth more than $5 billion, the company said Thursday.
Windsor, Conn.-based SS&C, ranked No. 33 on the 2017 CRN Solution Provider 500, specializes in investment management software and services. Buying DST would bolster its financial software prowess and, perhaps more notably, add a trio of health-care-focused solutions to the company's portfolio.
SS&C plans to purchase DST at an $84-per-share premium and assume any of its debt, putting the transaction's overall valuation at $5.4 billion. The deal would create a $3.9 billion solution provider powerhouse with more than 13,000 clients combined; DST reported pro forma revenue of $2.3 billion for the 12 months preceding Sept. 30 of last year.
Both the SS&C and DST boards of directors have approved the transaction, which is anticipated to close in the third quarter of 2018, according to the announcement. SS&C expects the DST buy is expected to be accretive to its earnings per share upon deal closure, with anticipated yearly cost savings of $150 million reached by 2020.
DST Systems' offerings include banking, investor, brokerage, adviser, wealth management and insurance solutions on the financial side of the house as well as administration, pharmacy and health outcome optimization solutions on the health-care side. The company employs more than 14,000 globally and has a particularly strong presence in the U.S. retirement and wealth management markets.
"The combination will position us to capitalize on the demand for outsourcing in financial services and better enable our clients to address increasing competitive and regulatory pressures," SS&C CEO Bill Stone said of the DST deal in a statement.
SS&C did not immediately respond to a request for additional comment.
The two companies are no strangers, as SS&C bought a financial services-focused subsidiary of Kansas City, Mo.-based DST – DST Global – for $95 million in December 2014. Stone said at the time that DST Global's geographic footprint was a key point of interest given the solution provider's desire to expand beyond North America.
Initial reporting of a potential deal caused SS&C stock price to spike Wednesday afternoon, rising $5.42 (12.8%) to $47.96 per share as of market close. DST Systems' stock price increased by $14.74 (22.6%) to close at $79.89 per share.
SS&C has been an active buyer in recent years, most recently acquiring digital services provider Modestspark for an undisclosed sum last October. That deal added an array of client portal and experience enrichment tools to the company's accounting solutions business.
In 2016, SS&C's purchases included Wells Fargo Global Fund Services, asset services firm Conifer and CRM platform developer Salentica, along with a one-third stake in learning tech provider Nervanix.