Exclusive: Mitek rejects the acquisition approach of ASG & # 039; backed by Elliott - sources
Exclusive: Mitek rejects the acquisition approach of ASG & # 039; backed by Elliott - sources
(Reuters) - Mitek Systems Inc., a US provider of financial technology to banks, has rejected a takeover approach by hedge fund software company Elliott Management Corp, people familiar with the matter said on Wednesday.
The offer from ASG Technologies comes at a time of uncertainty for Mitek, who said in August that both Chief Executive Jim DeBello and Chief Financial Officer Jeff Davison were retiring to retire or seek other roles.
ASG approached Mitek for the first time during the summer, the sources said. After ASG submitted a written offer to value Mitek for what it considered a significant premium, Mitek rejected the offer and told ASG that it preferred to remain independent, according to sources.
Last week, ASG wrote a letter to the Mitek board urging it to participate again in the merger discussions, the sources added. Mitek is not chasing a sale, they said.
The exact price of the ASG offer could not be known. The sources asked not to be named because the matter is confidential. Elliott and ASG declined to comment, while Mitek did not return a request for comment.
Shares of Mitek rose 10 percent to $ 7.30 on the Nasdaq on Wednesday afternoon, giving the company a market capitalization of nearly $ 300 million.
Based in San Diego, Mitek has agreements with large banks such as JPMorgan Chase & Co to handle mobile check deposits. It anticipated annual revenues of between $ 62 million and $ 63 million this year.
The company also reduced its forecast for annual profit margins to a range of 15 to 16 percent in July from 19 percent to 20 percent. According to the analysts, the main business of the company could be challenged since the circulation of physical controls is in decline.
ASG, based in Naples, Florida, received an investment last year from Evergreen Coast Capital, the private equity arm of the activist hedge fund Elliott Management. A unit of KKR & Co became an investor in ASG last year when it acquired FS Investments from Blackstone Group's credit division, GSO.
ASG is looking to expand its software products to banks through the acquisition of Mitek and increase the development of Mitek technology that helps verify identities, the sources said. The software platform of ASG, Mobius, already helps banks to store data for a certain time to comply with regulations.
The company has about $ 250 million in annual revenue, sources familiar with the matter said. Acquired a new company called Mowbly for an undisclosed sum earlier this year.
Elliott has been using its private equity arm, Evergreen, to acquire both public and private companies and, sometimes, involves the unit when it pushes the companies to explore a sale.
Report of Liana B. Baker in New York; Edited by Jonathan Oatis and Matthew Lewis
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