The ever-acquisitive Fiserv Inc. is expected to swallow a big fish any day with a deal to acquire the remainder of the once-preeminent credit union business of Electronic Data Systems Corp. (EDS).
If completed, the deal would follow last fall's acquisition by Fiserv of EDS' electronic payments processing operations, Consumer Network Services, and eliminate the rest of EDS' credit union business, which once served as many as 2,500 credit unions.
Fiserv CEO Leslie Muma confirmed he is in negotiations with EDS on acquiring the company's credit union operations, which provides data processing services for 1,500 credit unions. "We are in conversations with them and both parties are hopeful they will be consummated. Otherwise, we wouldn't be talking," said Muma
In an indication that the deal is near completion, Fiserv has asked the U.S. Justice Department to conduct an investigation under the Hart-Scott-Rodino Antitrust Act, something that is not normally requested until after a deal has been completed. "Normally we file for Hart-Scott after we file the transaction," Muma conceded.
The Justice Department is investigating whether the proposed deal, which would marry EDSs' data processing for credit unions with six Fiserv subsidiaries processing data for 2,300 credit unions, would pose anti-competitive pressures in the market for credit union services.
Fiserv currently provides data processing for credit unions through its XP Systems, USERS, SUMMIT, AFTECH, CUSA Technologies, and Galaxy subsidiaries.
If the acquisition is completed, Fiserv and its subsidary companies would have a 34% marketshare of the credit union data processing market.
Muma said he could not give a time period for when negotiations on a deal with EDS may be completed. "I can't elaborate on what we're looking at, although it's a good business to be in. It adds to us in a lot of ways," he said.
Fiserv is believed to the only bidder for the EDS operations, which employees 500 people around the country.
Officials for EDS, which has been struggling financially for the past two years, said the Fiserv talks were part of additional restructuring plans that include lay-offs of another 2,700 employees, the sale of non-core assets, and the reemphasis of the company's core information technologies business. The reduction in workforce comes after 5,600 lay-offs last year.
Kevin Lightfoot, a spokesperson for the company, said it has identified $250 million in non-core assets ripe for sale.
The brunt of that, apparently is the credit union business. "We've set out some really strategic priorities to rejuvenate the company," said Lightfoot. "They include focusing on our core IT outsourcing business. That's what we do best."
Last year's acquisition of the EDS' EFT assets launched Fiserv among the major players in the EFT operation by adding EDS' Morris Plains, N.J., processing for 4,700 financial institutions, including 25 credit unions, and ownership in six EFT networks, including MPACT, ACCEL-Exchange and Exchange International.