First Data to acquire Concord EFS
02 April 2003 | 3467 views | 0
First Data is to acquire Concord EFS in a $7 billion all-stock transaction. The deal creates a payments processing powerhouse with combined annual revenues of approximately $10 billion and employing some 31,000 staff worldwide.
Under the terms of the transaction, First Data will exchange 0.4 shares for every Concord common share. At yesterday's closing price, the deal values each Concord share at $13.87. The combined company expects to generate cost savings of approximately $230 million on an annualised basis by 2005.
The deal is likely to raise the stakes in First Data's ongoing battle with Visa as it bids to stem bank defections from Concord's Star ATM network to the rival Visa InterLink system. Condord's share price has nose-dived this past year, partly due to worries over the vendor's ability to renew long-term bank subscriptions to Star. First Data is already engaged in a legal dispute with Visa over bank use of the First Data Net transaction processing network.
The real war, however, will be waged at the checkout, where First Data's merchant connections and Concord's networking capabilities give the firm an edge in the battle with the card schemes for dominance in the emerging market for PIN debit payments.
First Data chairman and CEO Charlie Fote, hails the merger with Concord as a significant step in developing an open and competitive electronic payments system. "Access to our combined depth and scale will give banks and merchants an unprecedented voice in the introduction of innovative payment offerings to consumers," he says.