Harland Takeover to Eliminate Competition in Check Printing

ATLANTA – The proposed acquisition of John H. Harland by Clarke American parent M&F Worldwide is expected to undergo intense scrutiny by federal antitrust regulators, as it once again removes a major player form the dwindling check printing market. The deal combines Harland, the second-biggest check printer, with Clarke American, the third-largest check-printer which M&F bought last year for $800 million. Perelman was attracted to the industry because of the steady flow of cash the companies generate, analysts said. It is the second time in a year a Harland deal has eliminated a competitor in the market, following last year's acquisition by Harland of Liberty Enterprises. All of the firms, including industry leader Deluxe Corp., have experienced diminished returns from their check businesses, as electronic commerce continues to eat into paper check volumes at growing rates. Both Harland and M&F emphasized yesterday after announcing the merger that the deal is conditioned upon approval by the antitrust division of the Federal Trade Commission. M&F, which is controlled by billionaire Ron Perelman, has agreed to acquire Harland for $52.75 a share–a 19% premium over Tuesday’s closing price of $44.47 a share–or $1.7 billion. The M&F, formerly known as McAndrews & Forbes, is the Perelman holding company that acquired such name brands as Revlon cosmetics and Marvel comics and established Perelman as one of the preeminent corporate raiders during the 1980's and ‘90's. With Intuit’s planned acquisition of Digital Insight, and Carlyle Group's acquisition of Open Solutions, it is the third takeover of a major credit union outsourcer in the past six weeks. As part of the Harland deal, Harland will be required to pay M&F a $52.5 million break-up fee if the deal doesn’t go through. After announcement of the deal, Harland shares rose 13% to close at $50.31 a share on the New York Stock Exchange.