STRATEGIC PARTNERS
March 31, 2003
MEMPHIS, Tenn. -- First Data Corporation is close to acquiring Concord EFS Inc., according to a New York Times report.
The price will be slightly more than $7 billion, the report said, citing executives close to the negotiations.
The two companies hope to complete an agreement this week, though the executives stressed that several issues must be resolved and that the transaction is not yet a done deal.
Under terms being considered, according to the Times, First Data would pay Concord EFS about $15 a share -- nearly a 60 percent premium over Concord's closing price on March 31.
The deal would consolidate much of the nation's transaction processing activity in First Data, which suffered a blow recently when Bank One said it would take its card processing business elsewhere.
Concord has been under pressure to find a buyer since word spread earlier last month that the company had put itself up for sale. This caused some analysts and investors to worry that Concord could be selling itself because it was in danger of losing bank network contracts and sent Concord stock on a slide.
(See related story Rumors of sale dog Concord)
Concord is renegotiating its contracts, which are set to expire next year, with Wells Fargo and with Bank One for its Star Systems network. First Data has a 64 percent stake ownership in NYCE Corporation, operator of the NYCE network.
First Data emerged the front-runner for Concord EFS after recently outbidding Automatic Data Processing Inc., according to the Times.
A spokeswoman for First Data told the Times, "We don't speculate on market rumors." A spokesman for Concord EFS could not be reached, according to the Times.
Competition for card transactions has stiffened as Concord, First Data and Visa U.S.A., which operates the Interlink network, have lowered the fees they charge to banks and retailers to process debit transactions in an effort to gain market share.
Shares of Concord EFS have suffered due to sale rumors, falling 28 cents to $9.40 on March 31. Shares of First Data rose 29 cents, to $37.01.
Concord also restated its earnings last week, adjusting the way it accounted for its interchange fee for debit card transactions, after the Securities and Exchange Commission requested an accounting change.
The change resulted in a reduction in revenue offset by a reduction in cost of operations -- and, therefore, had no effect on reported operating income, net income or cash flows for any annual or quarterly period.
