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First Data Corp. to acquire payment processing and outsourcing unit from Delta Singular SA
Deal heralds entry of leading global payments provider to Greece and South-East Europe
Delta Singular to merge with Alpha Bank SA June 10th, 2004 -- First Data Corp. (NYSE: FDC), a global leader in electronic commerce and payment services, today announced it has signed an agreement to acquire Delta Singular Outsourcing Services SA (DSOS), the payment processing and outsourcing division and fully-owned subsidiary of Delta Singular SA [premium content] (ATHEX: DESIN), a leading technology company in Greece. Serving financial institutions and major corporations in Greece, the Middle East and the Balkans, DSOS provides payment processing and outsourcing services, including card processing, ATM and Point of Sale (POS) driving and call center support. Through the acquisition of DSOS, First Data has secured a long-term agreement to provide payment processing and related services to Alpha Bank SA (ATHEX: ALFA). The bank has always been the principal client of DSOS and is Delta Singular's controlling shareholder, with a 38.8% stake, as at February 29th, 2004. Alpha Bank is the largest issuer of Visa cards and the exclusive issuer of American Express cards in Greece. "The addition of DSOS to First Data is clearly a strategic fit and establishes a solid presence for us in Greece and South-East Europe," said Ms. Pam Patsley, president of First Data International. "It supports our focus on global growth, brings complementary core competencies in electronic payments processing and a long-term relationship with Alpha Bank." "We believe that this is the right deal at the right time for our business, our employees and, importantly, our customers," said Mr. Andreas Drymiotis, Chairman of Delta Singular, whose family owns 1.6% of the company as at February 29th, 2004. "The benefits arising from this deal with First Data will confer substantial advantages on the business in Greece and in the greater area of South Eastern Europe. Following the sale of DSOS, the merger with Alpha Bank makes practical business sense for all parties." The acquisition will create additional opportunities for clients in the Greek, European and Middle Eastern markets and enable expansion of a variety of payments services, including credit and debit POS processing, deployment of merchant ATMs, cheque authorisation and money transfers in this region. First Data Corp. did not announce any terms of the transaction, but Delta Singular announced that the deal was signed for a cash consideration of EUR 206 million, subject to a number of conditions, including Delta Singular shareholder approval, First Data board approval, approval of the Competition Commission of the Hellenic Republic and other closing conditions. Subject to those approvals, First Data anticipates closing the transaction in the third quarter of 2004. J.P. Morgan plc is advising First Data, and Credit Suisse First Boston (Europe) Limited (CSFB) and Alpha Finance SA are advising Delta Singular on this transaction. An integral part of this transaction is that DSOS will enter into a 10-year service agreement with Alpha Bank. This agreement, which includes minimum volume guarantees, termination penalties and long-term exclusivity for the provision of services, has been valued at Euro 55 million and will be recognised as a liability of DSOS. As a result of its acquisition of DSOS, First Data will assume this liability to be settled in cash. "First Data's acquisition of DSOS represents a major foreign direct investment inflow for Greece in the area of high technology, bringing new know-how in this vital for the national economy payment systems industry," said Mr. Yannis S. Costopoulos, Chairman and Managing Director of Alpha Bank. "This is a good opportunity to ensure that the Delta Singular business achieves its full potential, by combining its skills and local knowledge with the scale of a global player. Finally, for Alpha Bank, this deal will strengthen our business structure so as to further concentrate on our core banking operations." About First Data US-based First Data Corp., with corporate headquarters in Denver, Colorado, helps power the global economy. As a worldwide leader in electronic commerce and payment services, First Data provides credit, debit, smart card and stored-value card issuing and merchant transaction processing services; Internet commerce solutions; and cheque processing and verification services to financial institutions in more than 70 countries on six continents. Its Western Union and Orlandi Valuta money transfer networks include approximately 188,000 agent locations in more than 195 countries and territories. With more than 30,000 employees world-wide, First Data has offices throughout Europe, Asia Pacific, Africa, Latin America and North America. About Delta Singular SA Delta Singular is a leading group of companies in the Greek information technology (IT) sector, formed in 2001 through the merger of two of the largest IT companies in Greece, Singular SA and Delta Informatics SA. Providing state-of-the-art software products, as well as integrated systems and IT outsourcing services to the Greek private and public sectors, the Delta Singular Group aims at establishing long-term relationships with clients in order to become their strategic partner as far as IT is concerned. Singular's contribution to the combined entity is comprised of its leading market position and technical superiority in software development and distribution, as well as a strong systems integration division, Internet and e-commerce expertise, an extensive and reliable business partner network and international exposure. Delta Informatics brings invaluable experience in the credit card services market and the banking sector in general, as well as reliability and trustworthiness in services outsourcing, such as card processing, ATM switching and sharing and EDP services provision. The activities of each company were completely complementary to each other, prior to the merger. About Alpha Bank Founded in 1879, Alpha Bank SA is Greece's second-largest private commercial bank. With 445 branches, Alpha Bank is also active in South-East Europe and Cyprus. Alpha Bank offers a comprehensive range of financial services to private and corporate customers. With approximately Euro 32 billion in assets, more than EUR 2 billion in equity, Alpha Bank generated EUR 284 million in profits after tax and minorities in 2003 and nearly EUR 100 million in profits after tax and minorities in Q1 2004. Alpha Bank is listed on the Athens Exchange with a market capitalisation of about EUR 5 billion and is a constituent of the Eurotop 300 Index. Alpha Bank is the Official Bank of the Athens 2004 Olympic Games. About DSOS DSOS provides end-to-end secure payment systems and card issuer processing services for financial institutions. DSOS was created by the spin-off of Delta Singular's IT Outsourcing Services business unit into Delta Singular’s wholly owned subsidiary GRAFO, subsequently renamed to DSOS. DSOS has become a leading provider of outsourcing services to a large number of national and overseas financial institutions in Greece. These services are predominantly centered on the provision of card and payment-related functions. Delta Singular's management believes that DSOS will benefit from international ownership in order to expand its geographic scope and customer base, and fully leverage its competencies. In particular, in the face of increased competition from large independent third party outsourcers and international bank consortia, smaller European payment processors such as DSOS would benefit from consolidation with larger international organisations. In this way, DSOS will be in a position to exploit new market opportunities as barriers to entry in local markets continue to break down, with the introduction of European Union harmonisation legislation such as the EU Regulation 2560/01 which aims to create a level playing field in Europe in the arena of electronic payments. Having given due consideration to these developments and corresponding prospects, Delta Singular's management considers that the strongest future for the DSOS business lies in its sale to First Data, a global leader in electronic commerce and payment services. Satisfying customer demand for financial services outsourcing will continue to require an increasing degree of innovation and complexity. Delta Singular's management believes that only technologically advanced organisations, with efficient operations and sufficient resources to invest will be capable of fulfilling clients' needs in the future. Combining the two complementary organisations of DSOS and First Data is expected to create a leading-edge provider and distributor of financial services outsourcing in Europe. The combination of the two management teams' expertise and the transfer of best practices between the companies, will enable the combined entity to offer its clients an even wider range of high quality, innovative and strongly competitive products and services in the greater area of South-East Europe. DSOS is one of the largest financial services outsourcing providers in Greece, with a wide range of business activities and strong inherent potential for growth. Being part of First Data is expected to enhance the breadth of career opportunities offered to DSOS employees, facilitating the attraction and retention of quality staff and helping the business exploit its full potential. Merger by absorption of Delta Singular by Alpha Bank The boards of directors of Delta Singular and Alpha Bank are recommending the merger by absorption of Delta Singular by Alpha Bank to their respective General Meetings of shareholders at an exchange ratio of 10 Delta Singular shares for 1 Alpha Bank share. Rationale The Delta Singular board, in its assessment of the company’s future, took into consideration the fact that in the last few years the profitability of Delta Singular has been driven by the performance of DSOS. Delta Singular's other two business units, Delta Singular Software Development (DSSD) and Delta Singular Systems Integration (DSSI) (resulting from the spin-off of Delta Singular's Systems Integration business unit into wholly-owned subsidiary OneWorld SA, subsequently renamed DSSI) have provided a lesser contribution to revenues and profitability of Delta Singular. Therefore, following the sale of DSOS, the business prospects of Delta Singular and the liquidity of its shares trading on the Athens Exchange (ATHEX) is likely to be limited. Given this consideration, the Delta Singular's shareholders stand to benefit through the merger from the enhanced liquidity of Alpha Bank shares and the opportunity to realise value. The Alpha Bank board believes that the sale of DSOS to First Data and the merger with Delta Singular will create benefits for its shareholders, including:
In the period prior to the completion of the merger, the Board of Delta Singular will continue to explore strategic options for its other subsidiaries, DSSD and DSSI. Should other opportunities not arise for these businesses prior to the merger, the Alpha Bank board together with the management of both subsidiaries will continue to explore possibilities thereafter. Transaction structure The merger by absorption of Delta Singular by Alpha Bank is to be effected at a proposed share exchange ratio of 10 Delta Singular shares for 1 Alpha Bank share. The merger is expected to be completed by year-end 2004, subject to obtaining the necessary approvals. An announcement will be made in due course with further details on the proposed merger including the merger balance sheet date and other relevant information. It is proposed that independent reporting accountants be appointed specifically for the purpose of the merger and to provide reports regarding the merger, as required by Greek Law. According to these requirements, the reporting accountants will verify the book values used in the merger of the balance sheets of the two companies as of the merger balance sheet date and express their opinion on whether the share exchange ratio is fair and reasonable. Based on the average weighted closing price of Delta Singular share for the one-week, one-month, two-month and three-month periods ended on June 8th, 2004 (the last day before this announcement), and the average weighted closing price of Alpha Bank share for the week preceding the announcement, the exchange ratio implies a premium of 14.9%, 20.5%, 17.3% and 14.2% respectively and a valuation of EUR 259.4 million for Delta Singular as of June 9th, 2004. The merger by means of absorption will be effected in accordance with the provisions of Article 16 of Law 2515/1997 (as amended by Law 2744/1999) and Law 2166/1993 of the Hellenic Republic. Conclusions of the boards of directors Consistent with its objective of delivering shareholder value, the Delta Singular board believes that the transactions described herein constitute an attractive opportunity for its shareholders. The Alpha Bank board believes that these transactions will generate significant benefit for its shareholders, as outlined above. Sources: First Data Corp., Delta Singular SA, Alpha Bank SA, INVgr.
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