Chief Executive Mike Lawrie's decision to leave Misys
The two companies, which compete in banking software, laid out more terms of their proposed all-share merger, which was flagged on Friday, after market close on Tuesday, with investors in the British company owning 53.9 percent.
Analysts said that with the departure of Lawrie, who has a reputation as a dealmaker, the chance of another bidder had receded.
He is taking the top post at Computer Sciences Corp
Jefferies analyst Milan Radia said a transaction between Misys and Temenos was now the most likely outcome.
Numis analysts David Toms said: Yes, that's it. Goodbye Mr Lawrie.
Shareholders have been hopeful of M&A activity that could boost both companies' prospects against a backdrop of weak demand from banks still reeling after the financial crisis.
The lacklustre reaction from investors on Wednesday, however, raised questions as to whether the companies' falling into each other's arms was the best solution, despite both highlighting increased revenue opportunities and cost savings.
Misys shares, which rose to a five-month high of 353 pence on January 31, closed down 8.5 at 326 pence, while Geneva-based Temenos' stock, which had risen 30 percent since mid-January, was off 7.8 percent.
We think the deal is more a reflection of the tough market backdrop inciting both companies to merge, and see a number of potential near-term risks that currently outweigh the long-term benefits in our view, analysts at Investec said.
Temenos Chief Executive Guy Dubois and Chairman Andreas Andreades will take the same roles in the combined group.
Later on Wednesday, Misys named Tom Kilroy, its general counsel, as acting CEO to lead the negotiations with Temenos.
Lawrie failed to sell Misys to Fidelity National Information Systems
ValueAct had strong support for the Temenos deal, Misys said, but a reference to the City code indicated that Misys would be open to another bid.
(The statement) reads as if Misys is up for sale; however we think this has been the case since the FIS Global bid last year, said Merchant Securities analyst Roger Philips.
No other bidders emerged then and we see the shares as overvalued now, so we question whether other options are genuinely available apart from Temenos.
Both companies sell banking software to more than 1,000 customers each in retail and corporate banking. Misys also has a treasury and capital markets division.
Misys, which has a market value of about $1.72 billion (1.08 billion pound), has invested millions of pounds in its new BankFusion platform, which manages customer accounts and process transactions, and has found success in selling it in the Middle East and Asia.
Demand in Europe, however, remains weak and it said last month it would have to make cost savings.
Temenos, worth $1.35 million, has also suffered in the downturn. It has restructured after a tough 2011, when it wrote off $27.6 million in July for poorly performing projects.
Lazard is lead financial adviser to Temenos, with Morgan Stanley as financial adviser, while Barclays Capital is lead financial advisor to Misys and JP Morgan Cazenove is acting as corporate broker and financial adviser.
(Editing by Mike Nesbit)