SunGard Data Systems Inc., a provider of software for financial-services companies and "hot site" backup and recovery services with $3 billion in annual revenue, disclosed Monday that it's engaged in discussions to be acquired.
A group of private-equity firms led by Silver Lake Partners is negotiating to take the company private, according to published reports. A SunGard official declined to comment. In late-day trading on the New York Stock Exchange, SunGard shares stood at $31.21, up 25% from the opening bell.
SunGard's planned spin-off of its backup and recovery business, which was disclosed last year, is still on track, the official says.
The fact that SunGard appears to be the target of a leveraged buyout bid is a surprise, says Octavio Marenzi, CEO of market-research firm Celent Communications. The company has strong management and deep customer relationships, he says. Nevertheless, "the decision is apparently to dismantle the company," Marenzi says.
If the company were to be broken up, customers would probably see little change. For all practical purposes, the company acts as a set of autonomous companies. Its dozens of products span different niches across the financial-services industry. Large financial institutions are sometimes served by multiple SunGard account teams, Marenzi says.
SunGard systems perform trade-order execution, risk-management, and record-keeping tasks for banks, investment managers, mutual funds, brokerage firms, and investment advisers. Major product lines include brokerage and trading systems, wealth-management systems, treasury- and risk-management systems, investment-management systems, and benefit, insurance, and investor accounting systems.