Changes at Deluxe - eFunds

D eluxe Corporation announced in early February that its board of directors has approved a plan for a strategic realignment of Deluxe that would create two independent companies. Under the plan, Deluxe is combining its eFunds and iDLX Technology Partners businesses into a separate, independent publicly traded company, eFunds Corporation. Deluxe Paper Payment Systems (PPS) will continue to operate under the Deluxe Corporation name and continue to trade under the ticker symbol DLX.

Separating the Businesses

Deluxe will sell a minority interest in eFunds through an initial public offering (IPO). Following the IPO, Deluxe intends to pursue a split-off of eFunds Corporation through an exchange offer that would provide Deluxe shareholders the opportunity to exchange, on a tax-free basis, shares of Deluxe common stock for shares of eFunds Corporation. A split-off would be conditioned upon obtaining a favorable tax ruling from the Internal Revenue Service and there can be no assurance that such a ruling would be obtained. Deluxe Corporation expects to continue its $1.48 annual dividend.

J.A. Blanchard, Deluxe Corporation chairman and chief executive officer, said, “The announcement of today’s plan to split-off Deluxe’s higher growth businesses is consistent with our strategy to create strategically focused enterprises that can independently achieve their business objectives and pursue growth opportunities in their respective markets.”

Blanchard continued, “Separating the new eFunds maximizes our strategic flexibility and optimizes the capital structure of both the eFunds and Deluxe Corporation’s businesses. It creates two pure-play companies—each with its own focused management teams and with a currency that can be used to attract and retain talented employees as well as for acquisitions. As separate companies, each will set its own strategy, allocate resources, pursue growth strategies, including acquisitions or alliances, and make marketing and management decisions.”

“The two companies will operate in very distinct environments that require a unique focus on the needs of customers and partners in each market. eFunds and iDLX will focus on the dynamic, larger and faster growing e-commerce and e-payments markets whereas Deluxe’s PPS business, with its strong cash flow, is ideally suited to deliver value to consumers and small businesses,” Blanchard added.

eFunds Corporation: eFunds and iDLX Technology Partners

eFunds provides a variety of e-payment products and services including: electronic transaction processing, electronic funds transfer, and integrated payment protection services to the financial and retail industries. iDLX provides information technology and technology-related professional services to financial services companies as well as Deluxe’s businesses.

Blanchard stated, “The fit between eFunds and iDLX is natural. The two units have been working together to solve the business needs of financial services companies for more than a year. In addition, iDLX has been providing important software support to eFunds businesses. Easy access to iDLX’s high quality, low cost programming resources has helped eFunds speed new products to market.”

Deluxe Corporation: Deluxe Paper Payment Systems

PPS is the nation’s leading check printing business. PPS provides checks and related products to consumers and small businesses through financial institutions, direct marketing, Internet, and retail channels.

Blanchard said, “PPS is a highly profitable and successful business. The separation of eFunds will free PPS to pursue its growth opportunities, particularly with new products and services delivered via the Internet and focused on consumers and small businesses, while improving its products delivered to financial services customers and consumers.”

Management

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