M&I to spin off Metavante - WSJ

M&I to spin off Metavante - WSJ

US bank Marshall & Ilsley is close to spinning off its electronic payments division Metavante in a $4 billion transaction that will see private equity firm Warburg Pincus paying cash for a minority stake in the unit, according to a Wall Street Journal report.

The report, which cites people familiar with the matter, says that M&I is planning a "sponsored spin" in which the Metavante business would be spun off to shareholders in a tax-free transaction, with Warburg acquiring a minority stake in the firm.

Warburg has made some $2.5 billion of investments in the financial technology sector over the past few years, including the acquisition of treasury and cash management specialist Trema and German point-of-sale network operator easycash.

The deal is expected to be announced in the next few days, says the WSJ.

The spin-off would separate the M&I banking and trust business from the highly-acquisitive Metavante unit, which provides a number of technology platforms for cheque processing, electronic payments and the Nyce ATM network.

M&I came near an initial public offering of Metavante in 2000, but the deal was pulled following a market slowdown. Since then Metavante has acquired a number of businesses, including the Nyce electronic payments network in 2004. But according to the WSJ report last year the unit accounted for 40% of M&I's revenue but only 20% of the bank's pre-tax profits.

News of the spin-off come hot on the heels of the announcement yesterday that private equity firm Kohlberg Kravis Roberts (KKR) is buying out US e-payments processor First Data in a $29 billion deal.

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