First Data Corp. and Paymentech Inc. announced a $400 million agreement Monday to effectively merge two of the biggest operations in the credit card merchant processing business.

First Data said it plans to acquire the 16 million outstanding public shares of Paymentech, approximately 45% of the company, at $25.50 each. Bank One Corp. would retain the other 55%.

The resulting organization, as yet unnamed, would be folded into Bank One Payment Services LLC, an existing joint venture of First Data and Bank One.

The deal would strengthen an already close relationship between those organizations while taking the merchant-acquiring part of the card industry further down the consolidation road.

This is "a big deal for First Data," said Paul Martaus, president of Martaus & Associates, Clearwater, Fla.

The Atlanta-based processor, which is the leader in both merchant transactions and in servicing MasterCard and Visa cardholder accounts for banks, has had to rebound from the effects of customer mergers. It lost BankAmerica Corp. when it merged with NationsBank Corp., for example.

First Data's combining of operations with Paymentech, which became part of Bank One through the 1997 acquisition of First USA Inc., will bolster one of the bigger joint ventures that First Data calls merchant bank alliances. In these, banks control merchant relationships and rely on First Data for transaction processing.

Pamela H. Patsley, president and chief executive officer of Paymentech, based in Dallas, will run the larger entity.

"We are really taking the best from each organization and combining it into one," Ms. Patsley said.

Bank One Payment Services primarily serves customers who have relationships with Bank One. Paymentech's merchant customers are generally larger than Bank One's and are not the result of a particular banking relationship. Paymentech is also especially steeped in the mail-order and telephone-order business.

First Data would end up owning approximately 47% of the company, Bank One 53%, said Ms. Patsley.

The merger makes sense for several reasons, said industry experts. For one thing, Paymentech would no longer compete against Bank One Payment Services, which is the seventh-largest merchant-acquirer.

Chase Manhattan Bank, another First Data merchant ally, is the largest. Ms. Patsley said the new venture will be No. 2.

Much of the groundwork has already been laid. A month ago, Paymentech signed a contract with First Data to take over the portion of its merchant processing that competitor Electronic Data Systems Corp. was handling.

"This gives First Data a new lease on alliances," said Jerry Craft, president of the Atlanta consulting firm Infistar.

"We are pleased to be able to deepen our already strong relationship with Bank One," said Ric Duques, chairman and chief executive officer of First Data. "This merger significantly strengthens Banc One Payment Services' ability to offer customers a broad array of competitive services."

"Retail clients need full-service processing solutions that allow them to cost-effectively accept any form of payment at the point of sale, said Richard W. Vague, chairman and CEO of Bank One's First USA unit and chairman of Paymentech. "The combination of Paymentech with Banc One Payment Services will allow us to bring our customers the processing scale and efficiency to do that even more effectively."

Details regarding the headquarters of the new organization and the future role of Jeffrey P. Neubert, who has headed Bank One Payment Services for two years, have not been worked out. Mr. Neubert ran Bank One's credit card business before Bank One acquired First USA.

Pending regulatory approval, antitrust clearance, and shareholder votes, the companies expect the transaction to be completed in the third quarter.

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