Bisys Takes a Buyout

//May 7, 2007

The $1.47 billion deal is part Of CitigroupÂs focus on hedge fundsROSELAND – Bisys Group Inc. last week chose Citigroup Inc. from among 142 suitors. The financial-services outsourcing company agreed to be acquired for $1.47 billion.

The 18-year-old Bisys provides outsourced services for mutual funds, hedge funds and private equity funds, and is a large insurance wholesaler. Bisys shareholders will each get $12 per share in cash; share prices have ranged between $11 and $14 in recent months, below their yearly high of $16 in May 2006.

The deal fits snugly with CitigroupÂs renewed focus on selectively growing its presence in the markets for hedge funds, private equity funds and mutual funds.

Bisys, which put itself up for sale last August, is the administrator for about 80 funds with a combined asset base of more than $500 billion. The company has 5,200 employees in the United States and London; Dublin, Ireland; and Hong Kong.

Bisys posted net income of $232.2 million on revenues of $842.9 million for fiscal 2006, compared with net income of $6.1 million on revenues of $851.3 million for the previous fiscal year. Fiscal 2006 included $234.9 million of net income related to discontinued operations.

Bisys has had a few brushes with the law in recent years. Last September it paid $21.4 million to settle Securities and Exchange Commission allegations that the company had given $230 million in rebates to mutual fund advisers to get them to recommend Bisys for contract renewals. The company settled the case without admitting wrongdoing. In a separate action, Bisys last October paid $66.5 million to settle a class-action suit.

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