Siris Capital Group is ponying up $840 million to acquire Digital River. Digital River is a major global provider of Commerce-as-a-Service solutions.
Vantiv, Inc. announced an agreement to acquire Mercury Payment Systems, LLC for an aggregate price of $1.65 billion. Mercury is a payment technology and service leader whose solutions are embedded into point-of-sale software applications and brought to market through their dealer and developer partners. Mercury is currently majority-owned by Silver Lake, a global leader in technology investing.
Wells Fargo & Company and Dillard’s, Inc. announced that the two companies have entered into an agreement for Wells Fargo to fund, issue and service Dillard’s-branded private label and co-brand credit cards. Wells Fargo will also manage the cardholder loyalty program for Dillard’s. The program agreement has a 10-year term and is anticipated to become operational in the fourth quarter of 2014, following the scheduled expiration of Dillard’s current program agreement. Financial terms of the agreement were not disclosed. Dillard’s management believes its earnings from the new program exclusive of startup costs will be comparable to its historical earnings from the Dillard’s branded credit card products and believes that earnings will increase with future program growth.
Bank of America announced that it and Barclays Bank PLC have entered into an agreement with Equity Residential and Lehman Brothers Holdings Inc. pursuant to which Bank of America and Barclays will sell their remaining 26.5 percent interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties, for a purchase price of…
While not FDIC seized like WaMu, Wachovia sold its retail bank, corporate and investment bank and wealth management businesses to Citi. Despite the window dressing, this is the second major U.S. bank failure in less than a week. Citi agreed to pay $2.1 billion to Wachovia and assume its senior and subordinated debt. At this time, there are no changes to Wachovia’s board of directors and two Wachovia directors will join Citigroup’s board. Wachovia will remain headquartered in Charlotte, N.C. Wachovia says that during recent weeks, the financial landscape has changed significantly and presented unprecedented challenges.
Dallas-based Alliance Data Systems is going private following a deal to be acquired by Blackstone Capital Partners for about $7.8 billion in cash and debt assumption. Blackstone will acquire all of ADS common stock at $81.75 per share in cash, representing a 30% premium over yesterday’s closing price. The deal is expected to close year-end. ADS posted record first quarter revenue of $549.2 million, a 15% increase over the year-ago quarter. Net income rose 1% to $56.9 million driven by strong performance in its Marketing Services unit, according to CardData ([www.carddata.com]). The ADS/Blackstone deal follows last month’s news that First Data signed an agreement to be acquired by Kohlberg Kravis Roberts for about $29 billion. Under the agreement, FDC shareholders will receive a premium of approximately 34%. (CF Library 4/2/07; 4/19/07)
The third largest bottler in the U.S. is installing cashless payment technology in vending machines. AL-based Coca-Cola Bottling Company United has begun equipping its vending machines with USA Technologies’ “e-Port G6” to accept “MasterCard PayPass” contactless payments as well as traditional magnetic stripe credit card payments. The cashless vending machines will be deployed in multiple markets in the Coca-Cola Company’s home market, reaching consumers from Atlanta, Georgia, to Baton Rouge, Louisiana. In November MasterCard announced that 5,000 additional self service POS terminals, including vending machines, will be equipped with USA Technologies’ “e-Port” cashless transaction solution to begin accepting “PayPass.” The 5,000 “e-Ports” will be deployed in New York City, Dallas, Chicago, Las Vegas, San Francisco, Los Angeles, Boston, Washington D.C., Denver, Seattle, Miami and Orlando. The deployment follows a successful trial of 1,000 vending machines in the greater Philadelphia area. Last month Taco Bell announced plans to test “MasterCard PayPass.” “PayPass” is now accepted at more than 46,000 merchant locations worldwide and there are nearly 13 million “PayPass”-enabled cards now in the market.
In what ranks among the ten largest buyouts ever, First Data this morning confirmed it has signed a deal to be acquired by an affiliate of Kohlberg Kravis Roberts for about $29 billion. Under the agreement, FDC shareholders will receive a premium of approximately 34% over the average closing share price during the previous 30 trading days. Under the merger agreement, FDC may solicit proposals from third parties during the next 50 days to locate an alternative transaction. The KKR transaction is expected to close by the end of the third quarter. Since its initial public offering in 1992, FDC has grown from $1.2 billion in annual revenue to $10.6 billion prior to the spin-off of Western Union and $7.1 billion post spin-off. An investment in the company’s IPO, adjusted for the recent spin-off of Western Union, would have generated 18% compounded annual returns. FDC also owns a 49% stake in Chase Paymentech. In January, FDC reported that fourth quarter revenue grew 14% to $1.9 billion and that operating profit was up 67% year-on-year. Morgan Stanley is serving as sole financial advisor to FDC. Citigroup, Credit Suisse, Deutsche Bank, HSBC, Lehman Brothers, Goldman Sachs and Merrill Lynch have committed to provide debt financing for the transaction and are acting as financial advisors to KKR. (CF Library 1/25/07)
Providian, the nation’s 9th largest general purpose credit card issuer with an $18 billion card portfolio, is being acquired by Seattle-based Washington Mutual for $6.45 billion. After nearly collapsing in 2001 with a $55 million loss, Providian has reinvented itself from a major sub-prime issuer to a significant middle-market player, doubling its profits over the past three years. Under terms of the deal announced this morning, WaMu will pay 89% in stock and 11% in cash. Providian will become WaMu’s fourth major business unit and will continue to operate out of in San Francisco. Joseph Saunders, who led the Providian turnaround since November 2001 as chairman and CEO, will continue to run the credit card business after the merger. WaMu also indicated it plans to retain all of Providian’s management team and infrastructure. In the first quarter, Providian posted a 41% increase in net income to $133.0 million. Last year, Providian posted net income of $381.2 million, compared to $219.4 million in 2003 and $179.7 million in 2002. Prior to its near collapse in 2001, Providian posted net income of more than $600 million in 1999 and 2000. According to CardData, Providian had $18,089,000,000 in credit card outstandings as of March 31st, and 9.9 million accounts. WaMu currently has assets of $319.7 billion. The PVN/WaMu deal is expected to close in the fourth quarter. (CF Library 11/26/01; 4/26/05)
PROVIDIAN NET INCOME HISTORICAL
1999: $614.5 million
2000: $667.4 million
2001: -$54.6 million
2002: $179.7 million
2003: $219.4 million
2004: $381.2 million
Source: CardData (www.carddata.com)
Citigroup has inked a deal to acquire $6.6 billion in credit card outstandings from Federated Department Stores for a premium of approximately 11.5%. Under terms of the agreement, Citi will initially acquire Federated’s $3.2 billion owned proprietary and VISA receivables, then in April 2006 acquire $1.2 billion in Federated card receivables currently owned by GECC and finally acquire the $2.2 billion credit card receivables portfolio of May Department Stores within one year following the merger with Federated, which is expected to close in 3Q/05. Additionally, Federated and Citigroup have signed a multi-year agreement for performance payments after the receivables sale is completed as well as engage in various joint marketing initiatives. The Federated and May credit card portfolios have about 17 million active accounts. The companies noted that Federated and May credit card customers will continue to be serviced through Federated’s service centers located in Mason, OH, Clearwater, FL and Tempe, AZ and May’s service centers in Lorain, OH and Earth City, MO. Federated was advised in the transactions by Credit Suisse First Boston, First Annapolis Consulting, Simpson Thacher & Bartlett, Jones Day and Sidley Austin Brown & Wood. At the end of the first quarter, Citigroup had $24.7 billion in private label credit card outstandings and $115.8 billion in bank credit card outstandings, according to CardData ([www.carddata.com])
Two top issuers are coming together to form the largest general purpose credit card issuer and the third largest signature debit card issuer in the USA. J. P. Morgan Chase and Bank One announced plans yesterday afternoon to merge, creating a $125 billion credit card portfolio and $20 billion debit card portfolio. The combined portfolios will serve 95 million credit cardholders and nearly 9 million debit cardholders. The merger will unseat Citibank as the nation’s largest credit card issuer. At the end of the third quarter, Citibank had about $117 billion in North American credit card outstandings. Citibank has an estimated $103 billion in U.S. credit card outstandings. During the fourth quarter Citibank purchased the Sears credit card portfolio which included approximately $13 billion in MasterCard receivables. Even with the Sears acquisition, Citibank will fall behind the Chase/Bank One portfolio. Bank One currently ranks as the nation’s #3 credit card issuer and Chase ranks as #5. In debit cards the combined portfolio will fall just behind Bank of America and Wells Fargo. The Chase/Bank One portfolio will produce more than $2 billion in credit card profits annually. Over the past twelve months, Bank One has generated $1.13 billion in credit card profits. Both credit card portfolios have been lackluster until recently. Chase reported in third quarter that its outstandings were flat year-over-year, but overall performance metrics were improving. Chase also added 300,000 credit card accounts during the third quarter. Bank One’s third quarter card profits were down 4% over the previous year, but up 2% over the previous quarter. Bank One has been rebuilding its card portfolio over the past two years after its First USA unit tumbled. During 2003, Bank One launched several major co-branded credit cards in partnerships with Disney, Starbucks and Avon.
TOP CREDIT CARD ISSUERS
(as of 9/30/03)
ISSUER RECV CARDS
1. Citibank* $117.4b 105.9mm
2. MBNA $ 81.8b 73.4mm
3. Bank One $ 74.2b 53.0mm
4. Capital One $ 52.5b 48.3mm
5. JPM/Chase $ 50.3b 41.9mm
6. Discover $ 50.0b 50.0mm
7. Amer Exp $ 35.9b 36.2mm
8. Bank of Amer $ 33.6b 25.7mm
9. Household $ 17.6b 30.1mm
10. Providian $ 17.0b 9.7mm
*Citibank includes other non-US North American accounts
Source: CardData (www.carddata.com)
TOP DEBIT CARD ISSUERS
(as of 9/30/03)
ISSUER VOL CARDS
1. Bank of America $43b 18.0mm
2. Wells Fargo $26b 15.0mm
3. Wachovia $16b 5.0mm
4. Bank One $13b 5.0mm
5. U.S. Bancorp $12b 5.0mm
Source: CardData (www.carddata.com)
Star Banc and Firstar signed definitive agreements yesterday to merge, thus creating the 21st largest U.S. bank holding company with assets of more than $38 billion.The combined company will have more 3 million customers via 720 branch locations in eight Midwest states and Arizona, plus trust operations in Florida. The merged company will also have more than $1.2 billion in credit card receivables and more than 962,000 accounts. Star Banc and Firstar have more than 1,400 ATM’s between them. Since the two companies have no geographical overlap there are no merger-related branch closings planned. The transaction is expected to close in the fourth quarter or early in the first quarter of 1999.
MERGER CREDIT CARD SNAPSHOT (EOY 1997)
RECV ACCTS ACTIVES CARDS
Firstar $803,000,000 710,000 598,000 1,115,000
Star Banc $436,100,000 252,246 163,000 366,000
TOTALS $1,239,100,000 962,246 761,000 1,481,000