Temenos is splashing out to buy a U.S.-based rival. The move is a bid to expand its software services business.
The Geneva-based software company is acquiring Austin, TX-based Kony for as much as $580 million in cash and debt, it said in a statement on Wednesday. As part of the deal, expected to close in the fourth quarter, Kony boss Thomas Hogan will become Temenos' president in North America, the two companies said.
The acquisition is a bold bid emblematic of the banking software industry's effort to lessen reliance on dwindling revenue from big projects and instead sell its solutions in a more piecemeal fashion. Swiss rival Avaloq is pursuing a similar strategy under new CEO Juerg Hunziker (click here to read more).
Flagship Reinforced
Temenos said together with Avoka, another software provider it acquired, the deal will strengthen its flagship front-office product, which handles customer acquisition and onboarding, omnichannel banking, customer retention and marketing, payments, wealth advisor, financial crime, risk and compliance, and analytics.
«The acquisition of Kony is highly strategic and will allow us to grow both our U.S and our digital front office business faster, while being highly accretive and synergistic to the rest of our business,» Temenos boss Max Chuard said. Chuard took over as CEO just five months ago.
Staff Surge
Specifically, Temenos said it expects a lift next year from Kony’s forecasted revenue of $115 million. The purchase of Kony, the majority of whose revenue is recurring, will add to Temenos earnings per share from 2021, and augment margins within three years, the Swiss company said.
The deal adds 1,500 Kony staff to Temenos' 3,647 employees – a 25 percent surge in total headcount. Kony's digital front-office software is on the U.S. market, and adds considerable functions and ease of use to Temenos, the company said.
