In the latest sign of consolidation among bank data processors, Fiserv Inc. is in the final stages of talks to acquire the out-sourcing business of AT&T Global Information Solutions, formerly part of NCR Corp.
Milwaukee.-based Fiserv which has built itself up over 10 years mainly through acquisitions - said it intends to add the AT&T unit to its increasingly diverse assemblage of outsourcing activities.
Although Fiserv and the telecommunications giant only disclosed they are in "substantive discussions" and still negotiating the details, George D. Dalton, Fiserv's chairman, said the deal should close soon.
While Fiserv officials declined to give details on the financial terms of the proposed acquisition, they said the AT&T unit's annual revenues were about $100 million.
"This is a company that was here long before anyone else, and survived, and they're still a tough competitor in this business," Mr. Dalton said.
The NCR outsourcing unit - an early entrant into the data processing business almost three decades ago - has been troubled in recent times by increased competition in the shrinking banking industry.
This forerunner for modern outsourcers - which during the early 1980s held processing contracts with almost 1,000 financial institutions - has seen its client base rapidly dwindle to just under 600 in the past few years. Critics also have cited a reliance on aging hardware, and only a year ago, one of the servicer's 13 data centers came under fire by the Federal Deposit Insurance Corp. for its "weaknesses in data security."
But these considerations did not sway Mr. Dalton and his company. He said Fiserv has no plans to immediately upgrade the AT&T unit's systems, sparing bank customers often painful conversions.
"I was a pup when [NCR] started this business," Mr. Dalton said. "This is still a key property in the community - it's one of the first, and at one time it was the largest."
This would be Fiserv's 50th acquisition after a decade in the outsourcing business. If the acquisition goes through, Fiserv will have more 6,700 banking customers all together.
To run these varied segments smoothly, Fiserv has sought to keep the companies it takes over fairly autonomous - most often leaving the same operations and the same management in place. The outsourcer said it plans to handle this proposed acquisition much the same, accentuating the positive aspects of the outfit, including the experience of its managers.
"We've become a favored acquirer for not going in and shooting a lot of people," Mr. Dalton said.
The AT&T data services division is currently led by Michael Grabeman, a 25-year NCR veteran, who is expected to remain. Fiserv has expressed its intent to keep the organization and its management intact if it does indeed acquire the unit, Mr. Grabeman said, and that should present a familiar environment for the unit.
"There's a great deal of understanding [with Fiserv], much more so than from AT&T," he said, "although AT&T has its benefits, too."
Although this marriage has yet to be consummated, experts see this as a strong match that seems almost necessary to the AT&T unit's survival.
"With a decline like [NCR] has seen, that company has only two places to go, the altar or the morgue," said M. Arthur Gillis, a consultant who tracks banking vendors.
For Fiserv, this new unit provides yet another venue to grow, he said, and for the AT&T data services unit, this provides a solid grounding in a company that specializes in the same area it does.
"Fiserv is a wonderful acquirer, they feed, enhance and nurture," Mr. Gillis said. "Realistically, Fiserv can give the AT&T unit a sense of stability and prevent further erosion, whether they can promote an upswing is debatable."
