MISYS LTD 
By ZURICH/LONDON (Reuters) - British software firm Misys (>> Misys plc) said it was continuing to pursue takeover approaches from two private equity groups after Swiss rival Temenos (>> Temenos Group AG) pulled out of merger talks, saying it could not pin Misys down to a deal.
Only last week, Temenos won more time to prepare its all-share merger proposal for banking software specialist Misys, after Britain's Takeover Panel extended a deadline by four weeks.
Temenos said on Monday talks had ended because the two companies could not reach an agreement, but it could still come back to the table if another bidder made a firm offer.
Misys said it was still pursuing a possible cash deal with Vista Equity Partners or a rival private equity combination of CVC Capital Partners and ValueAct Capital.
A source close to the talks said Temenos still believed it made sense for the two groups to combine - both of them are suffering from weak demand from the banking sector - but that the Swiss group had run of patience.
"Although Temenos believes there is major upside from a combination, it is very disciplined in how it evaluates opportunities and could not agree satisfactory terms in a reasonable timescale," the source said.
Shares in Misys fell 2.1 percent to 333.9 pence by 0925 GMT, while Temenos was down 4 percent to 15.55 francs, making it the worst performer in a flat Swiss midcap index <.SMIM>.
Analyst George O'Connor at Panmure Gordon said he was not surprised Temenos had walked away.
"The bid was less attractive to shareholders given, in our view, that the combo could not afford a cash 'sweetener' and as the operational reality struck home, the difficulties became more real, and the deal did little to help Temenos in its expansion in the United States," he said.
'NOT AT ANY PRICE'
Vontobel analyst Panagiotis Spiliopoulos said it was a sign of Temenos's strength that it was walking away and not prepared to do a deal at any price.
"The termination of merger talks marks an important inflection point for Temenos," he said in a note, reaffirming his "buy" rating and 21 Swiss francs price target for the company.
Misys and Temenos announced on February 3 they had begun talks and four days later said they had agreed on the key terms of the deal, which would see Misys take 53.9 percent of the equity but the Swiss company's chief executive and chairman leading the management team.
The talks triggered a rival approach for the British firm from specialist private equity company Vista Equity Partners, and later a joint approach from ValueAct, Misys' largest shareholder, and private equity company CVC.
Vista has until March 19 to make a firm bid, unless an extension is granted, while CVC and ValueAct have until April 2.
In February, the Financial Times reported that Vista was eying a 360 pence per share bid, valuing Misys at about 1.2 billion pounds ($1.9 billion).
Some analysts have questioned that number, however, and there has been speculation the CVC-ValueAct combination was looking at a 325 pence a share bid in order to put a floor under the Vista proposal.
The Temenos-Misys all-share merger plan valued Misys at about 918 million pounds, according to both companies' share prices on March 5.
Temenos and Misys have been hit by a sharp fall-off in client spending, triggering the move towards joining forces to cut costs and boost revenue.
After spiking higher on news of the talks, Temenos shares are now trading below their level at the time of the original announcement. Misys shares are just over 2 percent higher.
($1=0.6372 British pounds)
(Editing by Mike Nesbit and Mark Potter)
By Martin de Sa'Pinto and Paul Sandle
