DEALTALK-Processing deals pick up, NA Bancard on sale

(For more Reuters DEALTALKs, click [DEALTALK/])

* North American Bancard hired Deutche Bank

* RBS expected to auction WorldPay

* Auctions signal more payment processor M&A

By Paritosh Bansal and Megan Davies

NEW YORK, Jan 27 (BestGrowthStock) – Privately held North American
Bancard Inc has hired Deutsche Bank (DBKGn.DE: ) to advise it on
a possible sale, sources familiar with the matter said, in a
sign payment processor deals are picking up after a two-year
lull.

Royal Bank of Scotland Group Plc’s (RBS.L: ) is also moving
ahead on a plan to sell WorldPay, its payment processing
business and is attracting significant interest from potential
bidders. [ID:nLDE60B1HI]

These deals support analysts’ expectations of more
consolidation activity in the payment processing sector, as
banks continue to be distracted with their problems and face
the need for further capital, and independent processors get
more comfortable with their position as the crisis abates.

Payment processing companies provide services such as
transaction processing, banking and payments technologies,
software services, card issuing and outsourcing services.

Multiples and valuations are a lot lower right now, John
Kraft, an analyst with DA Davidson & Co, said.

“People have been very hesitant because they really want to
keep their cash,” Kraft said. “Once these companies get more
comfortable with their own survival and use of cash, then yes,
this is a great time to be picking up assets strategically.”

NAB DEAL

Troy, Michigan-based North American Bancard had roughly $40
million in earnings before interest, taxes, depreciation and
amortization (EBITDA), one of the sources said.

That could value the company in the $500 million range,
based on an EBITDA multiple of 10 times to 15 times, according
to Davidson’s Kraft.

North American Bancard was founded in 1992 by Chief
Executive Marc Gardner and has more than 225 full-time
employees at its corporate office.

The company offers products including: credit, debit, check
conversion, and gift and loyalty card solutions.

Gardner and Deutsche Bank declined to comment. The sources
who spoke to Reuters declined to be named because the sales
process is not public.

QUIET AFTER SURGE

The sector saw a surge of deals in 2007, when companies
such as Fidelity National Information Services Inc (FIS.N: ),
Fiserv Inc (FISV.O: ) and others made multiple acquisitions.

A driver behind those deals was the belief that banks
preferred dealing with fewer vendors.

“They want to go to one vendor and have a best-of-suite
rather than a bunch of vendors for best-of-breed,” Kraft said.

But the last two years have been relatively quiet on the
M&A front, as companies worried about their survival amid the
financial crisis. Only a few deals have been struck, such as
Fidelity National’s $2.94 billion acquisition of Metavante
Technologies Inc.

Deal activity has also included banks selling assets, a
trend that continues with businesses like WorldPay coming to
market.

Last year, Bank of America Corp (BAC.N: ) sold its PayMode
product, operations and vendor network to Bottomline
Technologies (EPAY.O: ) and Fifth Third Bancorp (FITB.O: ) sold a
majority interest in its payment-processing unit to
private-equity firm Advent International Corp.

Stock Market Today

(Reporting by Paritosh Bansal and Megan Davies, editing by
Leslie Gevirtz)
(For more M&A news and our DealZone blog, go to
http://www.reuters.com/deals)

DEALTALK-Processing deals pick up, NA Bancard on sale