First Data to divest Nyce stake in return for Concord merger approval

First Data to divest Nyce stake in return for Concord merger approval

First Data has agreed to divest its 64% ownership stake in the Nyce debit card network in return for regulatory approval of its proposed purchase of rival credit card processor Concord EFS.

The settlement, which includes a revised price tag of $6.9 billion for Concord EFS, eases US Department of Justice concerns that the merged entity would squash competition in the market for processing PIN-based debit transactions at the retail point of sale. First Data's majority interest in NYCE aligned with Concord's Star, MAC and Cash Station networks would have given the combined company a market share of 70% of all PIN-based debit transactions.

The Independent Community Bankers of Association (ICBA), the banking industry trade body which first pressed the DoJ to oppose the transaction, described the settlement as a "positive step" in protecting the competitiveness of the EFT networks. "However," says ICBA President and CEO Kenneth Guenther. "we are hopeful that there are additional yet-to-be-announced settlement terms that will allow issuing banks to control the routing of their customers' transactions to ensure a truly competitive EFT network environment that is not dominated by the largest players."

In a statement, First Data chairman and CEO Charlie Fote says: "This settlement removes uncertainty and allows the companies to proceed with achieving the benefits of this merger."

The transaction is expected to close sometime in the first quarter, 2004.

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