News

Metavante acquiring NYCE network

May 16, 2004

BROWN DEER, Wis. - Banking technology company Metavante Corp. has agreed to buy the NYCE network from First Data Corp. and others for $610 million in cash.

First Data, which owns 64 percent of NYCE, will keep $389 million of the $610 million price. The rest will go to NYCE's minority shareholders, including J.P. Morgan Chase & Co., Citigroup Inc., HSBC Holdings PLC and Bank of America Corp.

Metavante said it expects the deal to close in the third quarter of this year.

Upon completion, Metavante will become the nation's second-largest provider of PIN-based debit transactions -- after First Data.

"Building upon our EFT industry experience and knowledge, Metavante has a significant opportunity to augment our electronic funds business by acquiring the nation's second-largest PIN-debit network in NYCE, which is a capability that we do not have today," said Frank R. Martire, Metavante president and chief executive officer, in a statement.

The purchase will also provide a new opportunity for cross-selling its computerized banking products and services, Martire said.

Metavante which is owned by Marshall & Ilsley Corp., was one of 30 companies that expressed interest in the 19-year-old NYCE network, according to a report the Wall Street Journal.

NYCE had revenue of $143 million and net income of about $31 million last year. Metavante had revenue of $729 million and operating income of $55.6 million in 2003. The transaction is expected to be approximately neutral to M&I's earnings per share in 2004 and add to earnings in 2005.

The purchase was the third in less than a month for Metavante, which earlier this month announced the acquisition of Advanced Financial Solutions Inc., Oklahoma City, which can transmit scanned images of checks between banks for processing.

Metavante also acquired Kirchman Corp., of Orlando, Fla., which sells software to banks that process financial transactions in-house.

Metavante said that nine of the nation's top 15 PIN-debit card issuers participate in the NYCE network, along with more than 2,150 other financial institutions. NYCE links these card issuers with more than147,000 ATM locations and almost one million PIN-debit point-of-sale locations.

Combined, Metavante and NYCE expect to serve 23 million ATM and debit cardholders, to process more than 235 million EFT transactions a month and to drive more than 20,000 ATMs.

NYCE will retain its senior management team and will operate as a subsidiary of Metavante. The NYCE brand will remain.

First Data has held NYCE as a separate unit since December 2003, pending First Data's divestiture of its ownership share in NYCE. This was the result of an agreement between First Data and the Department of Justice related to its merger with Concord EFS.