Trimming another of its extraneous processing ventures, National City Corp. of Cleveland has sold its majority stake in Stored Value Systems Inc. to Ceridian Corp.
Stored Value Systems provides cards on a private basis to large retail chains, mostly as substitutes for paper gift certificates. It is one of several operations that National City has divested in a housecleaning effort.
Stored Value Systems was "something we didn't see as a core business," said Daniel Shingler, a spokesman for the banking company. "Once we made that determination, then our process was to act on that pretty quickly."
Stored Value Systems, based in Louisville, Ky., was once housed within National City's merchant processing arm, National Processing Co., but was moved back under the parent company a few years ago, Mr. Shingler said.
Stored Value has 65 employees and generated more than $15 million in revenues last year. Its clients include Mobil, BP, Citgo, Kmart, The Gap, and J.C. Penney.
Ceridian, a Minneapolis company that handles human resources administration tasks for other companies, said it will fold Stored Value Systems into its Comdata division, which offers a private-label debit card service for trucking companies. Comdata also helps truck drivers with check cashing, fuel purchases, and long-distance calling.
Tony G. Holcombe, Comdata's president, characterized the acquisition as "synergistic."
It "gives Comdata the opportunity to become the leader in another growing, highly differentiated transaction processing niche," said Mr. Holcombe, who is a former president and chief executive officer of National Processing.
The Comdata link could help Stored Value Systems compete for business from both convenience stores and large retail chains, which are considered highly attractive markets.
National City says it plans to retain its 88% interest in National Processing, which has also been shedding smaller pieces of business.
Last month the latter sold its freight services and corporate payables unit to Investment Services International Co. of Washington. The sale, valued at $36 million, is expected to close by the end of March and produce an after-tax loss of $17 million.
"That was larger than what I was looking for," said Brocker Vandervliet, an analyst at Keefe, Bruyette & Woods Inc. "But I think it is positive that they are getting out of noncore businesses."
In 1998, the processing unit's net income increased 53%, to $10.7 million, according to a recent filing with the Securities and Exchange Commission. Income from its travel services division, which handles airline ticket processing, rose 25% last year, to $4.5 million.
Those gains were partially offset by the unit's corporate services division, which lost $5.4 million after earning $5.3 million in 1997. The loss prompted National Processing to retain Citigroup's Salomon Smith Barney to help seek buyers for unprofitable business lines.
Though National City has a "very profitable merchant card portfolio," some of that business and related ones "may not be their core competency," said Paul Martaus, president of Martaus & Associates in Clearwater, Fla.
