S1 Corp, a US-based provider of financial services software solutions today agreed to buy Israel's Fundtech Ltd, in a stock deal valued at about $700 million.

The combined company will be an industry leader in transaction banking solutions with best-of-breed technology that addresses a broad range of payment types, from card payments made by consumers to wire transfers made by large corporations, said S1 Corp in a statement.

Founded in 1993, Tel-Aviv-based Fundtech is a provider of software and services to more than 1,000 clients throughout the world. Payments systems include wire transfers, ACH origination, cross-border payments and remittance. Cash management systems are designed for large corporate through small business clients.

Fundtech operates the world's largest SWIFT service bureau including electronic invoice presentment and supply chain financing. It is also the leading provider of CLS systems to the world's largest banks.

It operates in Thailand, Malaysia, Philipines, Indonesia and few other countries in Asia including India.

Fundtech has its office in Pune, which manages more than 10 lakh on-line transactions for HDFC in a day during peak periods.

Under the deal, Fundtech shareholders will receive 2.72 shares of S1 common stock for each Fundtech ordinary share they own. Post acquisition, S1 shareholders will own about 55 per cent of the combined company and the rest by Fundtech shareholders.

In the first quarter of 2011, the companies generated pro forma combined revenue of $95.0 million, adjusted EBITDA of $10.4 million and net cash from operating activities of over $32.0 million.

As of 31 March 2011, the companies had pro forma combined cash, cash equivalents and marketable securities of $143 million and no debt. As a result of the merger, the companies anticipate annualised pre-tax cost savings of approximately $12 million by the end of 2012 and fully realizable in 2013.

The combined company to be called Fundtech will be headquartered at Atlanta and will be led by S1 chief executive Johann Dreyer.

Atlanta, Georgia-based S1 is a leading global provider of payments and financial services software solutions to more than 3,000 financial institutions in more than 75 countries.

"The future of the transaction banking industry is highly dependent upon innovation and state-of-the-art solutions and this combination will put us at the forefront of these advancements," said Johann Dreyer, CEO of S1 Corp. ''This merger will expand our geographic footprint and enhance our ability to accelerate revenue growth and increase profitability," he added.