* Cash deal comes after Temenos merger talks fail

* ValueAct-CVC waits in the wings

* Misys shares up 8.4 pct, above agreed offer

By Paul Sandle

LONDON, March 19 (Reuters) - British banking software services company Misys has agreed to a 1.27 billion-pound ($2 billion) takeover bid by Vista Equity Partners, after merger talks with Swiss rival Temenos collapsed last week.

Misys said on Monday it was backing a 350 pence-per-share cash offer from Vista, which will combine Misys with Kondor, the trade and risk management software firm which Vista bought last year from Thomson Reuters.

However, shares in Misys were up 8.4 percent at 357 pence by 1300 GMT as some investors bet on a higher offer emerging.

Misys's biggest shareholder, U.S. activist investor ValueAct which holds a 21.5 percent stake, did not endorse the offer. Earlier this month ValueAct said it had teamed up with private equity group CVC Capital Partners to consider making a bid of its own for Misys "that provides a certainty of cash upon completion" in preference to the Temenos all-share proposal.

ValueAct and CVC said in a statement on Monday that they were still considering whether to make a joint cash bid for Misys and advised shareholders to take no immediate action.

Temenos, which could also come back into talks now a rival offer has been made, declined to comment on its intentions.

Misys and Temenos are enduring tough trading as their core bank customers, under pressure to cut costs, delay spending on major upgrades to their transactional systems. Misys says it has over 1,200 customers including the world's 50 biggest banks.

Alongside news of the deal, Misys issued a profit warning, saying revenue plunged 12 percent in its fiscal third quarter, resulting in a 3 percent drop for the year to date.

Analyst Roger Phillips at Merchant Securities said that in the light of the profit warning the Vista deal looked good.

"In case any shareholders were thinking about not accepting, the Misys third-quarter (trading update) out today contains a very material profit warning," he said.

"In part this is down to deal-related delays in licence fee signatures but it also suggests Misys would face a rocky future on a standalone basis as trading conditions worsen."

HARD TO BEAT?

Misys's acting chief executive Tom Kilroy dampened hopes of a counterbid.

"If any other company made an offer we would of course talk to them, but we think it is unlikely this deal will be bettered," he said.

Kilroy said uncertainty about the company's future had contributed to the profit warning and was confident many orders had been postponed rather than cancelled.

Phillips said that given Misys's "moribund organic performance" over the last five years Vista could only justify the price on the basis of merger synergies with Kondor.

Misys has been up for sale since last summer, analysts have said, when takeover talks with Fidelity National Information Services failed. The U.S. group was reportedly considering a 400 pence a share deal.

Last month Misys agreed to merge with Temenos in a cost-cutting all-share merger but the proposed tie-up received a poor reception from Misys shareholders and the Swiss company then walked away.

Kilroy said as well as the enticement of cash, a deal with Vista secured Misys's product road map - something analysts said could have been disrupted by the Temenos merger.

"Our customers can now have complete confidence in the future of our products," Kilroy said.

The $2 billion transaction is at the larger end of Vista's typical deal size. It is funding it with a combination of equity and debt arranged by Credit Suisse, Merrill Lynch, Pierce, Fenner & Smith and Jefferies.

Misys said the holders of about 22 percent of its equity, including Schroder and Threadneedle, had backed the Vista offer.

Goldman Sachs is advising Vista whereas Barclays and JP Morgan Cazenove are working for Misys.

• A Permanent Economic Emergency