First Data Agrees to Divest Interest in NYCE; Terms Call for Reduction
in Exchange Ratio
Companies Will Discuss Transaction on 9 a.m. EST Conference Call Today
DENVER and MEMPHIS, Tenn., Dec. 15 /PRNewswire-FirstCall/ -- First Data
Corp. (NYSE: FDC), a national leader in electronic commerce and payment
services, and Concord EFS Inc. (NYSE: CE), a leading electronic transaction
processor, today announced a proposed agreement with the U.S. Department of
Justice (DOJ), eight states and the District of Columbia on terms that will
allow the companies to complete their proposed merger by the end of the first
quarter 2004.
In connection with the DOJ settlement, the two companies also agreed to
new financial terms, with a new value of approximately $6.9 billion, based on
First Data's closing price on Friday, December 12, 2003, of $39.30. The
revised merger agreement also extends the original January 31, 2004 end date
to April 30, 2004 to allow sufficient time to obtain the necessary shareholder
approvals of the revised terms. The revised agreement increases transaction
certainty by eliminating many, but not all, conditions to completing the
merger. The boards of both companies have approved the revised agreement.
Upon completion of the transaction, the combined company will provide
banks, merchants and their customers with more options to conveniently and
securely conduct a full range of electronic payment transactions. The
combined company will have approximately $10 billion in annual revenues with
more than 31,000 employees worldwide.
The proposed agreement with the DOJ calls for First Data to divest its
64 percent ownership of the NYCE Corporation, an electronic funds transfer
network. In addition, First Data has agreed to hold NYCE as a separate unit
pending the divestiture.
"We are pleased to move forward with the completion of this transaction,"
said First Data Chairman & CEO Charlie Fote. "This combination represents a
significant step in developing an open and flexible electronic payments system
that will foster competition to the benefit of consumers, merchants and banks.
The combined company will provide broad benefits to shareholders.
"This settlement removes uncertainty and allows the companies to proceed
with achieving the benefits of this merger," Fote added. "We also believe the
new financial terms represent a fair value for both sets of shareholders."
"We are delighted that we have come to an agreement with the Department of
Justice and we can move forward with this merger to the benefit of our
shareholders, our clients and employees," said Dick Kiphart, chairman of the
board, Concord. "The revised transaction terms increase the likelihood that
the merger will be completed. We look forward to joining the First Data
family."
Under terms of the new agreement with Concord, First Data will exchange
0.365 First Data common shares for every Concord common share. At Friday's
(December 12, 2003), closing price of First Data stock, the transaction was
valued at $14.34 for each common share of Concord. This exchange ratio
represents a reduction from the original exchange ratio of 0.40 shares.
To complete the transaction, First Data will issue approximately
175 million common shares to Concord shareholders. Upon completion of the
transaction based on the current shares outstanding, Concord shareholders will
own approximately 19 percent of the outstanding shares of the combined First
Data/Concord. The exchange of shares in the merger is expected to qualify as
a tax-free reorganization, allowing Concord shareholders to defer any gain on
their shares for U.S. income tax purposes.
The impact of the transaction in total to First Data's earnings per share
depends on the timing of realizing the anticipated synergies, which is
dependent on the closing date of the merger and the timing of the divestiture
of NYCE. This could result in a slightly dilutive impact to the company's
2004 earnings, prior to restructuring and integration charges. It is expected
to be accretive thereafter. The company expects to generate cost savings of
approximately $205 million in 2006.
The transaction is subject to necessary shareholder approvals. Closing is
expected sometime in the first quarter of 2004.
Merrill Lynch and JP Morgan served as financial advisors to First Data,
and Sidley Austin Brown & Wood LLP and Bingham McCutchen LLP served as legal
advisors. Goldman, Sachs & Co. and William Blair & Co. served as financial
advisors to Concord, and Kirkland & Ellis served as legal advisor.
CONFERENCE CALL:
First Data and Concord will host a conference call to discuss the
transaction today, December 15, at 9 a.m. EST.
To participate in the call, dial 888-831-9087 (U.S. only) or 630-395-0288
(international) ten minutes prior to the start of the call and use passcode
FDC.
A replay of the conference call will be available beginning December 16
continuing through 5 p.m. EST December 19 by calling 800-333-1859 (U.S.) or
402-220-0205 (international). No passcode is required.
About First Data
First Data Corp. (NYSE: FDC), with global headquarters in Denver, helps
power the global economy. As a leader in electronic commerce and payment
services, First Data serves approximately 3 million merchant locations, 1,400
card issuers and millions of consumers, making it easy, fast and secure for
people and businesses to buy goods and services using virtually any form of
payment. With 29,000 employees worldwide, the company provides credit, debit,
smart card and stored-value card issuing and merchant transaction processing
services; Internet commerce solutions; money transfer services; money orders;
and check processing and verification services throughout the United States.
First Data also offers a variety of payment services in the United Kingdom,
Australia, Canada, Japan, Mexico, Spain, the Netherlands, the Middle East and
Germany. Its Western Union and Orlandi Valuta money transfer networks include
a total of approximately 169,000 agent locations in more than 195 countries
and territories.
About Concord
Concord EFS, Inc., a vertically integrated electronic transaction
processor, provides the technology and network systems that make payments and
other financial transactions faster, more efficient, and more secure than
paper-based alternatives. Concord acquires, routes, authorizes, captures, and
settles virtually all types of electronic payment and deposit access
transactions for financial institutions and merchants nationwide. Concord's
primary activities include Network Services, which provides automated teller
machine (ATM) processing, debit card processing, deposit risk management, and
STARsm network access principally for financial institutions; and Payment
Services, which provides point of sale processing, settlement, and related
services, with specialized systems focusing on supermarkets, major retailers,
gas stations, convenience stores, restaurants, and trucking companies. For
more information, visit us at http://www.concordefs.com .
Not a Proxy Solicitation
This communication is not a solicitation of a proxy from any security
holder of First Data Corporation or Concord EFS, Inc. First Data Corporation
and Concord EFS, Inc. will be filing an amended proxy statement/prospectus
with the Securities and Exchange Commission (SEC) and other relevant documents
concerning the planned merger of Concord EFS, Inc. with a subsidiary of First
Data Corporation. WE URGE INVESTORS TO READ THE AMENDED PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE
SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able
to obtain the documents free of charge at the SEC's website, http://www.sec.gov. In
addition, documents filed with the SEC by First Data Corporation will be
available free of charge from First Data Investor Relations, 6200 S. Quebec
St., Suite 340, Greenwood Village, CO, 80111. Documents filed with the SEC by
Concord EFS, Inc. will be available free of charge from Concord Investor
Relations, 2525 Horizon Lake Drive, Suite 120, Memphis, TN, 38133.
First Data and Concord, and their respective directors and executive
officers and other members of their management and employees, may be deemed to
be participants in the solicitation of proxies in connection with the planned
merger. Information about the directors and executive officers of First Data
and their ownership of First Data stock is set forth in the proxy statement
for First Data's 2003 annual meeting of stockholders. Information about the
directors and executive officers of Concord and their ownership of Concord
stock is set forth in the proxy statement for Concord's 2003 annual meeting of
stockholders. Investors may obtain additional information regarding the
interests of the participants by reading the amended proxy
statement/prospectus, when it becomes available.
Notice to Investors, Prospective Investors and the Investment Community
Cautionary Information Regarding Forward-Looking Statements
Statements in this press release regarding the proposed merger of First
Data Corporation and Concord EFS, Inc. which are not historical facts,
including expectations of financial results for the combined companies (e.g.,
projections regarding revenue, earnings, cash flow and cost savings), are
"forward-looking statements." All forward-looking statements are inherently
uncertain as they are based on various expectations and assumptions concerning
future events and they are subject to numerous known and unknown risks and
uncertainties, which could cause actual events or results to differ materially
from those projected. Investors are cautioned not to place undue reliance on
these forward-looking statements and any such forward-looking statements are
qualified in their entirety by reference to the following cautionary
statements.
Important factors upon which the forward-looking statements presented in
this release are premised include: (a) receipt of regulatory and shareholder
approvals without unexpected delays or conditions; (b) timely implementation
and execution of merger integration plans; (c) the ability to implement
comprehensive plans for asset rationalization; (d) the successful integration
of the IT systems and elimination of duplicative overhead and IT costs without
unexpected costs or delays; (e) retention of customers and critical employees;
(f) successfully leveraging First Data/Concord's comprehensive product
offering to the combined customer base; (g) continued growth at rates
approximating recent levels for card-based payment transactions and other
product markets; (h) no unanticipated changes in laws, regulations, credit
card association rules or other industry standards affecting First
Data/Concord's businesses which require significant product redevelopment
efforts, reduce the market for or value of its products or render products
obsolete; (i) no unanticipated developments relating to previously disclosed
lawsuits or similar matters; (j) successful management of any impact from
slowing economic conditions or consumer spending; (k) no catastrophic events
that could impact First Data/Concord's or its major customer's operating
facilities, communication systems and technology or that has a material
negative impact on current economic conditions or levels of consumer spending;
(l) no material breach of security of any First Data/Concord's systems; and
(m) successfully managing the potential both for patent protection and patent
liability in the context of rapidly developing legal framework for expansive
software patent protection. In addition, the ability of First Data/Concord to
achieve the expected revenues, accretion and synergy savings also will be
affected by the effects of competition (in particular the response to the
proposed transaction in the marketplace), the effects of general economic and
other factors beyond the control of First Data/Concord, and other risks and
uncertainties described from time to time in First Data/Concord's public
filings with United States Securities and Exchange Commission.
FDC-1
SOURCE First Data Corp.
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Related links:
http://www.concordefs.com
CONTACT:
Investor Relations, David Banks (First Data)
+1-303-967-8057, or Ed Winnick (Concord) +1-302-791-8484; or
Media Relations, Staci Busby (First Data) +1-303-967-7188, or
Melinda Mercurio (Concord) +1-302-791-8109
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