Activist investor Petrus Advisers has succeeded in pushing through its demand for profit consolidation at Temenos. The banking software company is launching a share buyback program.

At the general meeting (GM) in May, shareholders refused to follow the board of directors in two votes. In the advisory vote, the remuneration report did not receive a majority, and the planned increase in the threshold at which shareholders can submit proposals at the GM also failed.

President Thibault de Tersant subsequently announced plans to strengthen dialogue with shareholders. And it appears that a demand from activist investor Petrus Advisers has been heard. Two weeks ago, they demanded a share buyback of 250 million francs and simultaneously increased their stake. Following the latest participation reports, Petrus's stake in Temenos rose to 5.123 percent from 3.42 percent.

Nearly 5 percent To Be Repurchased

Now, the company management has partially fulfilled this demand. Last Friday morning, Temenos announced the start of a share buyback program worth 200 million francs.

Starting Monday (June 10) until the end of 2024 at the latest, the company will repurchase its shares on a second trading line. Based on the closing price of the stock on June 5 at 56.90 Swiss francs, this would amount to approximately 3.5 million shares or about 4.68 percent of the outstanding capital. A corresponding capital reduction and the destruction of shares will be proposed at the 2025 general meeting.

The program has two benefits for shareholders and thus also for Petrus. First, it leads to profit consolidation per share, and second, the shareholding percentage increases if no shares are sold.

Positive Impact on Earnings Per Share

The company expects a slightly positive impact on earnings per share (EPS) for the current year 2024, which is expected to strengthen in 2025 due to the buyback program. Strong free cash flow generation supports the share buyback and leaves enough room to keep the leverage ratio at the lower end of the target range, the company further states.

The share price receives support from the announcement. Temenos shares rise by around 2 percent to 59.55 francs on Friday morning.