Payments technology company ACI Worldwide is facing growing pressure to put itself up for sale, with a large shareholder telling Activist Insight Online that it agrees with Starboard Value’s view that the company’s operational plan is not “ambitious enough.”

A top 10 shareholder that has owned ACI stock for 10 years has said in an interview with Activist Insight Online that there “should be a lot of interest” from both private equity firms and strategic acquirers, given the changes in the payments technology industry. The investor, which declined to be named, is dissatisfied with the company’s new operational plan, saying “they can do much better and this is a low bar that they can’t miss.”

Among the things ACI should do to be a viable public company that attracts investor interest is to fix organic revenue growth, the shareholder said. The investor communicated its concerns to the company, noting that management did not agree nor disagree.


With a market capitalization of around $4.6 billion, ACI is among the smallest publicly-listed pay technology firms. ACI has made a series of acquisitions over the past 10 years, including e-commerce payment gateway Pay.On in 2015, and Western Union’s Speedpay and Walletron in 2019, but the number of potential M&A targets that could significantly boost its growth profile in one fell swoop is now limited.

On November 10, ACI management unveiled its strategy for “launching a new ACI” revolving around a simplification of the company’s organizational structure, with fewer management layers; more investment in sales capacity, and growth through acquisitions and divestitures. It said these initiatives will lead to mid-single-digit organic revenue growth and mid-to-high-single-digit revenue growth when including M&A.

Shortly after the analyst day, Starboard sent a letter to the board, saying it was disappointed by the company’s guidance and instead suggested a sale. “While management’s long-term plan may create value, the plan isn’t good enough to justify remaining a standalone public company, carries significant execution risk, and will require years to complete,” the activist said.

Starboard did not immediately reply to a request for comment. The nomination deadline to appoint directors for the 2021 annual meeting is on March 11, with the meeting expected to take place in mid-June. ACI does not provide any right for shareholders to act off-season.

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Analysts also believe ACI should pursue a transaction. In a December 8 note seen by Activist Insight Online, Craig-Hallum Capital Group’s George Sutton said: “A sale is more compelling in our view, than the relatively benign growth anticipated by the long-term plan laid out.”

“We believe Starboard is only one of a growing number of activists becoming involved,” Sutton noted.

Craig-Hallum believes ACI could fetch between $46 and $56 per share in a transaction, resulting in a premium of up to 30% based on the company’s stock price on December 8. Fiserv, Mastercard, and Visa could be among the interested parties, along with Microsoft, Sutton wrote. Another possibility is that ACI “is carved down to its attractive Direct Bill Pay business – which would have an attractive growth profile as a standalone business,” according to Sutton.

A spokesperson for ACI told Activist Insight Online the company has been engaging with “shareholders, including Starboard, and expects to continue such discussions, including with respect to Starboard’s most recent communication and the perspectives that other shareholders are sharing with us.”

“The company is operating with a sense of urgency to maximize profitability, approach operations with renewed cost discipline, and identify all opportunities for compelling growth and value creation,” the spokesperson added.

ACI’s top 10 shareholders include Waddell & Reed Financial, BlackRock, Cardinal Capital Management, and Conestoga Capital Advisors. Starboard owns 8.8% of the shares.

The technology payment space has been undergoing consolidation in recent years. In 2019, Fiserv acquired Worldpay for $43 billion, while Global Payments merged with TSYS in a $21.5 billion deal. The pay technology market is dominated by Mastercard and Visa, which have a combined market capitalization of around $840 billion.