Hold on Tight! The Acquisition Roundup is in Full Swing

While February was the month of the layoff for telecom, Internet and related industries (Dell, Motorola, etc.) it was the month of the acquisition for the financial services industry. Foremost among acquisition announcements was First Data Corporation, which announced that it will soon acquire a majority equity interest in TASQ Technology, Inc. First Data will combine TASQ with First Data Merchant Services’ (FDMS) point-of-sale (POS) deployment operations and TASQ will be a majority-owned subsidiary of First Data. TASQ’s current senior management team will oversee the operations of the new entity that will be headquartered in Sacramento, CA, and retain the TASQ name.

Pamela Patsley, president of First Data Merchant Services, said, “The agreement strategically equips us for growth, and augments our suite of merchant solutions as the trends in electronic transactions accelerate. Combining the two companies will create a world-class organization, providing enhanced services for merchants, banks and independent sales organizations all across the country.”

The combined entity will provide POS-enabling services through service centers on the East and West Coasts, allowing merchants, banking clients and ISOs to receive more integrated services, quicker deployment of new equipment and faster emergency replacements. TASQ will assume responsibility for procurement of equipment and supplies.

First Data serves more than two million merchant locations, 1,400 card issuers and millions of consumers. For more information, visit www.firstdata.com. TASQ provides an extensive distribution channel of resellers with an end-to-end solution through information management, integrated logistics and growth infrastructure. For more information visit www.tasq.com.

...And That’s No Bull

An acquisition taking place in the technology sector of the financial services industry has been initiated by Schlumberger Test & Transactions, which has signed an agreement to acquire Bull CP8, for approximately $325 million. Bull CP8, a subsidiary of Groupe Bull, based in Louveciennes, France, provides highly secured microprocessor-based cards and associated applications systems.

Bull CP8 is a leading provider of microprocessor-based cards and applications systems for the banking, mobile communications and network security industries. The scope of the transaction comprises Bull CP8 and its operating subsidiaries (in Mexico, the Netherlands, Sweden, the United Kingdom and the U.S.) as well as its equity interest in several subsidiaries including Cardsoft, Cyber-COMM, SPOM, Trusted Logic and Xiring.

This acquisition will provide Schlumberger with complementary R&D and smart card technology capabilities, especially in the banking segment where Bull CP8 holds a worldwide position.

“The acquisition of Bull CP8 will expand the Schlumberger portfolio of advanced smart card and security solutions, extending their offering through our global solutions team,” said Irwin Pfister, executive vice president, Schlumberger Test & Transactions. “Schlumberger will gain further time-to-market advantage in new-generation mobile telecommunications smart card applications and reinforce its presence in the banking and network security segments.”

Schlumberger Test & Transactions provides consulting, systems integration and products for smart card-based transactions, IP (Internet Protocol) network security and wireless services, and testing and measurement of semiconductor devices. Additional information is available at www.slb.com.

Give Me Liberty...

The acquisition bug bit the credit union sector of our industry as well. Liberty Enterprises, Inc., acquired Cavion Technologies, Inc., a supplier of Internet services for America’s credit unions. Cavion created a secure, private communications network called CUiNET (Credit Union interactive Network) which provides a secure, high-speed communications platform for the delivery of information to and from credit unions and related organizations. The acquisition was the culmination of an effort by Liberty to prevent Cavion from being forced to turn off Internet services to more than 200 credit unions and related customers following Cavion’s Chapter 11 filing on December 21, 2000.

“Liberty has succeeded in our primary goal of keeping screens lighted for credit unions and their members while we put in cash and sought commitments from customers, suppliers and creditors,” said Robert D. Anderson, Liberty president and chief executive officer.

 “We have been given a singular opportunity to now develop this crucial Internet technology for credit unions. Liberty will deepen and create a wide range of services that will allow member-owned financial cooperatives to compete fully with the largest international banks, brokerages, insurers and other financial combines.”

Liberty continued to receive three-year commitments from current Cavion customers. “We view this as an acknowledgment of Liberty’s marketplace credibility, as well as a sign of confidence in Cavion’s products and services,” Anderson said.

 Liberty will take the exceptional step of providing up to six months of service for those credit unions who have chosen to leave Cavion during its Chapter 11 status. Liberty will also move quickly to determine the future direction of Member Emporium, an Internet portal for credit union members that was part of Liberty’s Cavion acquisition. “We’ll need to develop a new business plan for Member Emporium, a business that is very much like the old Cavion—leading edge technology with an unsustainable business model,” Anderson said.

Liberty is the credit union movement’s leading provider of payment systems (checks, card services, financial supplies), marketing services and technology solutions including data processing, Web site development and hosting and Internet banking. The sale of Cavion makes the company part of a 15-year-old private, family- and employee-owned organization with 920 employees. Liberty serves more than 5,000 credit unions in all 50 states, Guam and Puerto Rico.

The new Liberty Cavion unit will remain in Englewood, Colorado, and will be led by Liberty Executive Vice President for Internet Applications Michael J. Provenzano. For more information visit  their Web site at www.libertycheck.com.

Mission Accomplished

Bank holding companies also entered the acquisition ring. Firstar Corporation and U.S. Bancorp have completed their merger, creating the nation’s eighth largest financial services holding company with assets in excess of $160 billion.

Jerry A. Grundhofer, who served as president and CEO of Firstar Corporation, serves as president and CEO of the new U.S. Bancorp. John F. Grundhofer, former chairman, president and CEO of U.S. Bancorp, will serve as chairman until his retirement at the end of 2002. The new U.S. Bancorp is headquartered in Minneapolis.

The company also promoted key executives in its payment services group. Patricia A. Wesner will be responsible for the company’s branded and co-branded credit card businesses and Janet O. Estep will manage the transaction services group, including the merchant services business, with more than 130,000 business customers nationwide, as well as the company’s branded ATM network with over 5,200 machines.

Overall, the new U.S. Bancorp has approximately 10 million customers, 2,239 banking branches and 5,200 branded ATMs. For more information visit www.usbank.com.

53 + 49 = 53... Adds Up For Them!

Finally, processors participated in the month of acquisitions, too. Fifth Third Bank’s Midwest Payment Systems (MPS) has signed an agreement to acquire 49 percent of the outstanding common and preferred stock of Universal Companies, a privately held, fully integrated payment and e-commerce processor, headquartered in Milwaukee, Wisconsin.

Founded in 1992, Universal Companies has a client base of more than 50,000 small- and medium-sized merchants. In 2000, Universal Companies processed more than $4 billion in transaction volume, up from $3.2 billion in 1999. During its two most recently completed fiscal years, Universal Companies generated net revenues of approximately $73 million and $56 million, respectively.

“Having Fifth Third as a strategic investor gives us the capital and leverage we need to continue our rapid expansion,” said Ken Biel, President and CEO of Universal Companies.

Barry L. Boerstler, Executive Vice President, MPS, said, “This investment gives us an opportunity to partner with a rapidly growing and innovative enterprise focusing on the smaller merchant market segment across the U.S.” Boerstler continued, “With our current merchant sales and electronic funds transfer processing franchise in Chicago, and our pending acquisition of Old Kent Financial Corporation, which has dominant presence in Michigan and Illinois, partnering with Universal Companies clearly offers strong geographic synergy.”

MPS, a subsidiary of Fifth Third Bank, processes more than five billion ATM, POS and e-commerce transactions per year and drives more than 10,000 ATMs.  For more information visit www.53.com or www.usb.com.

Universal Companies operates through its subsidiary, Universal Payment Processing. As a single-source provider, Universal owns its own front-end switch (formerly BancTec Payment Systems), has its own back-end merchant accounting systems, and is a member bank of Visa and MasterCard. Universal provides transaction authorization, data capture, settlement and funds transfer services to over 50,000 business clients.

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