Paris, France-based Atos Origin, which saw its shares fall 18% recently following a profit warning, will pay an undisclosed cash sum to buy Banksys and Bank Card Company, which are currently owned by financial services companies Dexia, Fortis, ING, and KBC.
Banksys, the larger of the two target companies, authorizes, secures and guarantees electronic payments in Belgium on the Mister Cash and Bancontact networks, and also develops electronic payment terminals and payment applications. BCC manages payment systems linked to Belgium’s two largest credit card networks, Visa and MasterCard.
The two companies had combined revenue of E309 million ($391 million) in full-year 2005, and have 1,100 employees. As part of the deal, Atos Origin will also gain a stake in Banksys’ joint venture company in Italy, SiNSYS, which it co-owns with interbank processors Interpay and SSB.
Both companies will form part of Atos’ Worldline division, which has now established itself as the top dog in Europe’s fast-changing card processing market. It has historically been a highly fragmented space, with many banks teaming up to create single-country, interbank processing vehicles such as Banksys, and third-party players have struggled to establish themselves due to the many different national payments standards across the region.
In contrast, many US banks have long used third-party processors such as First Data and TSYS for their card-processing operations, although both these vendors have struggled to replicate their success in Europe.
However, Europe’s interbank processors are finding it tougher to compete on price with third-party players, which are able to offer greater economies of scale. With banks such as Santander and BNP Paribas increasingly operating on an international basis, they now want to work with a single partner that can provide a uniform, multi-country service. For example, Societe Generale chose third-party processor eFunds to handle its entire card-processing operations outside France last year.
The other big factor at play in the transactions-processing sector is regulation. The European Commission is in the process of creating a single European payments area (SEPA) by 2010, which demands that all payment cards can be accepted across all countries within the Eurozone.
Investment analysts estimated the value of the Atos Origin takeover to be equivalent to the two target companies’ combined annual revenue, and one pointed out that Atos Origin’s use of cash to fund the deal could limit its ability to make another large-scale takeover in the IT services sector in the near future.
