Fidessa agrees to £1.4bn takeover by Switzerland's Temenos

Under the terms of the deal, Fidessa shareholders will receive 3,567p in cash for each of their shares. They will also be entitled to a final dividend and a special dividend amounting to 79.7p for 2017.

The price represents a premium of around 37% to Fidessa's closing price on 16 February.

For the year ended 31 December 2017 on pro-forma basis, the enlarged group is expected to have revenues in excess of $1.2bn and earnings before interest, tax, depreciation and amortisation of $398m, making it one of the world's largest financial services software businesses.

Temenos executive chairman Andreas Andreades said: "We have long held Fidessa in high regard and we share a common goal of creating great software across both our segments and we are proud of our record of customer success and the exceptional client base we have built up amongst the global banks.

"We truly believe that this powerful combination will accelerate both companies complementary growth strategies in banking and capital markets and will enable us to cross-sell into our existing client bases and capture a greater share of the IT and software spend of banks especially as they move to the cloud."

Citigroup said: "As we see it, Temenos is trading near-term revenue growth and margin dilution for the opportunity to acquire a business that might benefit from better management in a market that may be at a positive inflection point in terms of the demand."

Barclays said it struggles to see the rationale of a purchase of Fidessa and is "concerned that this will result in distraction".

"Culturally these are very different companies and the integration will not be without risk. There is an opportunity to improve Fidessa's low margin, and the low funding cost could result in decent accretion."

At 1410 GMT, Fidessa shares were up 6.3% to 3,795p and Temenos shares were down 0.4% to CHF114.90.