CFI Proservices Inc. on Tuesday took ownership of Meca Software LLC from the six financial institutions that had owned it since 1995.
The transaction ended a five-month search for a buyer for the Trumbull, Conn., software consortium, and put CFI on a major new course.
Portland, Ore.-based CFI, known for selling compliance software, also announced it would buy UltraData Corp., which does back-office processing for 430 credit unions.
The resulting entity, which CFI plans to rename, is expected to generate sales this year of $150 million, more than six times CFI's 1998 revenues of $23.6 million.
Lois Roberts, senior vice president of sales, marketing, and customer services at the Oregon company, said Meca's Managing Your Money personal financial software, its Internet banking software, and particularly its Moneyscape portal software would let CFI "leapfrog into electronic commerce."
The deal for UltraData, which had 1998 revenues of $30.8 million, is part of CFI's strategy to bolster its host processing capabilities. In January, CFI bought Modern Computer Systems Inc. of Burnsville, Minn., a provider of data processing to community banks.
CFI on Tuesday issued 50,000 shares of its stock to Meca's owners and took on $10.5 million of Meca debt. Its stock price rose Tuesday on news of the Meca and UltraData transactions, to $11.75 a share, from $11.375 at Monday's close.
CFI said it would pay $7.50 a share, or $63 million, for UltraData. The deal is expected to close in the third quarter.
With the acquisitions, CFI would have more than one million consumers using its technology to bank on-line through their financial institutions. It also will be able to provide real-time host processing for financial institutions of any size.
CFI already has loan origination and branch automation compliance software installed in more than 2,500 U.S. banks.
Meca will become the electronic banking arm of the new company, and UltraData will become the credit union division. The current Meca and UltraData executives are expected to leave.
"My intent is to move on," said Paul Harrison, chairman, president, and chief executive officer of Meca, who organized the former ownership group of Bank of America Corp., Citigroup Inc., Fleet Financial Group, Royal Bank of Canada, U.S. Bancorp, and New England Financial.
The Meca acquisition is the fourth in the Internet banking field in the last six weeks. Just hours before the CFI announcement, Security First Technologies revealed Monday morning that it planned to buy Edify Corp. and the FICS Group for $1.4 billion.
Home Account Network Inc. said May 5 it would buy First Data Corp.'s direct banking unit for an undisclosed sum. And Intelidata Technologies Corp. and Home Financial Network Inc. said in April that they would merge to form Spherys.
Mr. Harrison said he believes more consolidation is to come.
"The cost to play has increased significantly," he said. "The industry can support two to three players and not much more than that."
Octavio Marenzi, research director at Meridien Research in Newton, Mass., said the "acquisition bonanza" in Internet banking was expected but that its pace has "caught people off guard."