Two of the nation's largest automated teller machine networks have scuttled a plan to join forces.
Cash Station Inc., which mainly serves Illinois, and Magic Line Inc., which covers much of Michigan, said Wednesday they have dropped efforts to seal a merger announced in January.
A deal would have created the largest network in the midwest, tying together 7,000 ATMs for 1,100 banks and thrifts.
The networks declined to explain the collapse of the talks. But industry sources said the two concerns could not agree on how much equity would go to the banks and thrifts that would have owned the combined entity.
The breakdown comes as ATM networks around the country are merging in efforts to achieve economies of scale.
In the Northeast, for example, the operators of the NYCE and Yankee 24 agreed to merge earlier this year. Meanwhile, Washington's Most network and Florida's Honor are reportedly negotiating after suspending the effort last year.
'Just Hasn't Happened'
The trend, however, has been slow to catch on in the Midwest. The collapse of the Cash Station and Magic Line deal is the second time in less than a year that an attempt to reduce the number of electronic banking networks in the Midwest has failed.
In the fall, a group of the region's largest banks abandoned an effort to form a meganetwork that would have consolidated the region's electronic funds transfer industry in a single motion.
"There is a lot of opportunity for the Midwest [EFT industry] to consolidate," said John G. Bascom, president and chief executive of Magic Line Inc., which is based in Dearborn, Mich. "But it just hasn't happened here to the same extent it has in other areas of the country."
The decision to abort the merger comes at an advanced stage in the negotiations. Magic Line and Cash Station had settled a number of important details, including the name of the new network and who would serve as its top managers.
But the equity issue reportedly proved insurmountable. Some observers said the dispute stemmed from a disagreement on how transactions were counted by each network. The equity distribution was to have been based on the transaction volume.
Mr. Bascom insisted that equity distribution was not the sticking point, but he declined to identify the problems.
Cash Station president Stephen S. Cole, who would have served as president of the merged network, characterized the break up of the two parties as "friendly and professional."
He, too, declined to address the reported disagreements over equity distribution.
Not Seen as Watershed
He also declined to say whether staffing or headquarters location issues figured into the cessation of the talks.
The networks had agreed to operate out of dual headquarters initially, but few observers believed the merged network would maintain two facilities over time.
"The two networks have agreed not to go into a whole lot of detail about [the failed talks]," Mr. Cole said.
Though many observers viewed the Cash Station merger agreement as the unofficial starting gun for a long-awaited consolidation of the Midwest EFT industry, few are taking its failure as a sign that consolidation will not progress.
Indeed, Mr. Cole said Cash Station and Magic Line are "keeping the door open to reconvening negotiations at some time in the future."