Activist Investor Starboard Mulls ACI As Potential M&A Prey

Activist investor Starboard Value already has 10.5 million shares — a 9 percent stake — in payments giant ACI Worldwide but is now eyeing the company for a potential takeover, according to a Reuters report on Thursday (Oct. 22).

Jeffrey Smith, the hedge fund’s founder, chief executive officer and chief investment officer , called the payments firm an “attractive” takeover candidate during the Capitalize for Kids virtual investors conference.

“ACI looks equally as attractive when you compare its current revenue multiple to recent transaction comps,” Smith said, per Reuters.

ACI has the assets and business characteristics for runaway success but Smith said the payments firm is not achieving results comparable to its competitors Blackbaud, Commvault Systems and FireEye, among others. 

Starboard’s conference presentation indicates that over the past five years ACI has returned 37 percent, considerably lower than its peers’ gains of 151 percent.

Smith said he has noticed the past few years that the payments space is abuzz with M&A fervor by private equity buyers as well as strategic investors.

“The valuations paid for recent acquisitions exceeds the multiple that ACI is currently trading at,” he said.

ACI, headquartered in Naples, Florida and founded in 1975, is worth $3.7 billion. The company powers electronic payments and banking worldwide for 5,000-plus banks, merchants, billers, and processors. around the world.

Starboard Value, founded in 2011 and based in Manhattan, has already won 22 board seats this year, including three at data management software maker Commvault Systems, an ACI peer.

ACI, for its part, is still busy making its own deals. Earlier this month, ACI partnered with Mastercard to expand real-time, multi-channel payment solutions worldwide. Over the summer, ACI announced that it was implementing digital overlay services to speed up real-time payments.

Jeremy Wilmot, group president at ACI Worldwide, told PYMNTS in July that he thinks the B2B payments landscape is being reimagined at the crossroads of public, digital and physical channels. He pointed to India as being a ripe opportunity, not just because of the population size, but also due to Prime Minister Narendra Modi’s determination for electronic payments adoption.