Deluxe Corp., the largest printer of bank check stock, with roughly 50% of the market, has approved a plan to break the company apart.

The St. Paul company, which was founded in 1915, is to create a separately owned and operated company called E-Funds Corp. The new company would do an initial public stock offering as early as May.

The changes would separate two increasingly diverse business lines. Deluxe's traditional paper business, solid and stable for years, attracts value-oriented investors who currently get $1.48 per share in annual dividends.

But the E-Funds division, which includes iDLX Technology Partners, a technology and services firm, and Deluxe's debit bureau service for debit card payments at points of sale, is poised for much faster growth in the electronic commerce market.

E-Funds' sales grew 13% in the fourth quarter, compared with the year before, but Deluxe's paper printing business shrank 4%.

E-Funds' stock would be more attractive to growth-oriented investors who deride Deluxe's dividend policy. In addition, E-Funds' ability to enter into certain undisclosed merger and acquisition activities has been hindered recently because of Deluxe, said Debra Janssen, president and CEO of the E-Funds division.

The deal will let E-Funds "focus on our growth strategy unencumbered by other parts of the organization which may have not been approaching the same strategies we were," Ms. Janssen said.

In a way, the spinoff is a throwback. Deluxe acquired E-Funds, an electronic payments software and services company, a year ago.

Heather Bellini, a Salomon Smith Barney equity analyst who covers Deluxe, said the deal "makes a lot of sense" because the "sum of its parts is greater than the whole."

Using conservative valuation formulas, the paper-printing portion of the business would trade at $22 a share, she said. E-Funds by itself should trade at about $13 a share, minimum, she said, bringing the total value of the stock to $35 a share. Deluxe closed Monday, the day the spinoff was announced, at $26.75 a share up 56 cents for the day.

"Deluxe is looking for hidden value," Ms. Bellini said. "It is the right thing for them to do."

J.A. Blanchard, chairman and chief executive officer of Deluxe, would become chairman and CEO of Milwaukee-based E-Funds Corp. Lawrence J. Mosner, vice chairman of Deluxe, would become chairman and CEO of Deluxe. Ms. Janssen would become president and chief operating officer of E-Funds.

Deluxe is to file an S 1 registration statement with the Securities and Exchange Commission within eight weeks.

Deluxe this week reported fourth-quarter net income of $58.2 million, up less than 2% from the year earlier. The company earned 79 cents a share, exceeding the Wall Street consensus by four cents. It produced $411.5 million of revenue in the quarter, down 17%, because of divested businesses.

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