ACI Holding Inc., the parent of Applied Communications Inc., has announced that it will acquire US Software Inc.
Acquisition of the Carter Lake, Iowa, company will strengthen ACI's position in the market for electronic funds transfer software. Terms of the deal were not disclosed.
Omaha-based ACI Holding was formed to acquired ACI from Tandem Computers Inc., Cupertino, Calif. ACI is the largest developer of software for Tandem's computers, which are designed to support on-line transaction environments such as ATM and point of sale networks.
ACI Holding plans to complete the Tandem deal by Dec. 31, after which ACI will be owned by a combination of managers, other employees, and equity partners.
The US Software acquisition will be effective the first day after the Tandem buyout is finalized. ACI and US Software, with combined revenues in excess of $80 million, will employ nearly 700 people.
ACI hopes the acquisition of US Software will give it entrance into markets with software that operates on computers other than Tandem's. "We believe this purchase will continue to reinforce our position as a market leader in on-line processing software for electronic funds transfer," said William Fisher, president of ACI.
Prior to the deal, the two companies competed in the market for electronic funds transfer software, primarily providing applications software supporting ATM and point-of-sale networks.
Although US Software is only one-tenth the size of ACI, Mr. Fisher said the acquisition is of strategic importance to both companies.
While ACI focused primarily on software for Tandem computers, US Software offers a number of similar products that run on other types of computers. Its EFT and credit card billing products are designed for International Business Machines mainframes and RS/6000 workstations and servers, as well as machines from Stratus Computer Inc. of Marlborough, Mass Tandem's leading competitor.
"This moves us into tiers of the market where we haven't had product," such as community banks, Mr. Fisher said. The RS/6000 and personal computers running Windows NT have become a viable platforms to run small funds transfer networks with IBM's introduction of versions of its CICS transaction processing software that run on those machines.
Mr. Fisher noted that the ACI and US Software market are also complementary. US Software has "been very successful selling into South America and the Middle East," he said. "Our hope is that we can leverage their growth utilizing the marketing channels we've developed in 50 countries."
The deal between the two companies has been in the works for about six months, Mr. Fisher said. ACI will operate US Software as an independent subsidiary and retain its top management.
The deal also represents a major step forward in ACI's plans to separate itself from Tandem, which spun it off earlier this year. Tandem bought the company from US West in 1991.