With software as a service mergers and acquisitions still on fire, Mitek Systems is an anomaly. The San Diego, California provider of software to banks is asserting its independence, rejecting a buyout offer from ASG Technologies, the hedge fund owned software company.
That’s even with upheaval at the company which handles mobile checks deposits for the big banks including JPMorgan Chase. In August it announced Chief Executive Jim DeBello is retiring at the end of the year while Chief Financial Officer Jeff Davison is stepping down in November to pursue another opportunity.
ASG First Made Overtures In The Summer
Reuters, citing people familiar with the matter, reported that over the summer ASG Technologies, which is owned by hedge fund Elliott Associates, approached Mitek about a deal, offering it a premium to sell. Mitek rejected it outright, saying it preferred to remain independent, reported Reuters. Earlier this month ASG Technologies tried it again, urging the Mitek board in a letter to consider merger talks. Despite the efforts, Mitek doesn’t appear to be interested.
Mitek’s Business Is Changing
The rejected buyout offer comes at a time when Mitek is facing a changing business environment that could hurt its prospects going forward. As the use of physical checks wanes, it stands to lose business. This summer Mitek reduced its full-year margins to between 15 percent and 16 percent from 19 percent to 20 percent. Its stock has been on the decline so far this year, although it traded higher on word of the buyout offer. It is still a formidable player in the market for mobile check deposit with its MiSnap, auto capture technology. Mitek says it has enabled more than 2 billion mobile deposits totaling $1.5 trillion in combined check value.
AGS Technologies Wants To Expand Mitek’s Identification Tech
But that may not matter to AGS Technologies. According to Reuters in addition to expanding its product offering to banks, it is interested in Mitek’s identity verification technology including its Mobile Verify platform. It relies on artificial intelligence and machine learning to determine the authenticity of documents. Using Mitek’s imaging capturing technology the platform compares the face of a selfie with the document’s photo to verify a person’s identity in real time. The company has other identification services aimed at fighting money laundering and other financial crimes. AGS Technologies has its Mobius software platform that provides banks with a way to store data for limited amounts of time to meet regulations. It has annual revenue of around $250 million, dwarfing Mitek’s projected annual revenue of $62 million to $63 million.
This isn’t the first time AGS Technologies has done the bidding for Elliott Associates through its Evergreen PE arm. According to Reuters Evergreen is actively acquisitive, using AGS Technologies to spur some deals.
