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Concord EFS Stock Drops Amid Sale Rumors, Changes

A March 10, 2003 Bloomberg news story reported that Concord EFS, Inc. wants to sell itself for up to $6 billion and has hired Goldman Sachs Group, Inc. to find a buyer. In addition, Concord made major changes to its management team in February, including the announcement that Edward A. Labry III, Director and President, would not replace Dan Palmer as CEO in May as expected. Concord's stock plummeted as a result of the announcements.

Bloomberg listed as potential buyers some of Concord's competitors: First Data Corp., Automatic Data Processing, Electronic Data Services, Total System Services and Visa International. However, Visa has denied any interest in buying the company. Concord refused to comment on the sale rumors, citing the report as "speculation."

Shares of Concord lost nearly 23% of their value on the New York Stock Exchange immediately following the management changes.

And after the Bloomberg news story hit the wires, shares of Concord fell more than 19%, bringing the stock price to a three-year low. So far in 2003, Concord's stock has fallen about 47%; in the last year, it is down nearly 70%.

Analysts and investors are concerned that Concord is having trouble renewing the contracts of major customers for its STAR debit card program, many of which will expire at the end of 2003. The network is losing market share to other competitors, such as Visa, MasterCard and First Data Corp.

Following are some of the management changes made by Concord's Board of Directors: Richard P. Kiphart, head of the Corporate Finance Department at William Blair & Co., was appointed Chairman of the Board; Dan M. Palmer, Concord Chairman and CEO since 1991, will serve as Director and Co-CEO; Bond R. Isaacson, Executive Vice President, was named Director and Co-CEO; and Edward A. Labry III will continue to serve in his current roles.

In a conference call for its investors, Palmer said the Board wanted Labry to remain in his current position in order to focus on growing the company's revenue.

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