Metavante Corp. said its deal to acquire Vicor Inc., a Silicon Valley maker of lockbox automation systems, would enhance its appeal to bigger banks and bring it into a new area of payments.
The Milwaukee vendor announced the deal last week but did not say how much it would pay. Metavante said the deal, scheduled to close this quarter, is not expected to have a material effect on its financial results or those of its parent, Marshall & Ilsley Corp.
Vicor's flagship product, the Receivable Information Delivery System, is used by banking companies such as Bank of America Corp., JPMorgan Chase & Co., PNC Financial Services Group Inc., and U.S. Bancorp, and by third-party lockbox operators such as RemitStream Solutions, a unit of Fiserv Inc. of Brookfield, Wis.
Vicor's image-based system can handle wholesale and retail transactions, as well as the remittance information that accompanies payments.
Paul T. Danola, the president and chief operating officer of Metavante's financial solutions group, said Vicor would enhance his company's treasury offerings.
"It's an important area where we want to grow," Mr. Danola said.
Metavante said it plans to offer small banks a hosted version of the system as part of a beefed-up cash management service.
Vicor already has a module that some of its big-bank customers use to offer white-label lockbox services to small correspondents, Mr. Danola said. "We can go at it that way, or we can go at it directly, whichever way the market prefers."
He said the technology also would help Metavante offer more products and services for markets that require complex receivable processing, such as the health care, government, and brokerage industries.
Metavante could accelerate Vicor's entry into adjacent markets, such as payables management, where Vicor already is developing technology, Mr. Danola said. "We're comfortable that we can extend the reach of the product."
Robert F. Kirk, Vicor's president and chief executive, said Metavante's market strength would open doors for his Richmond, Calif., vendor's products.
"Given our corporate structure, we were limited in how fast we were going to be able to grow," he said.
The privately owned Vicor ranked No. 99 on American Banker's FinTech 100 list of technology vendors last year, with revenue of $25 million. Mr. Kirk said it had been on track for revenue growth of 20% to 25% this year, but "it may be even greater than that now that this transaction is on the table."
Having never used venture capital financing or taken on debt gave Vicor an unusual degree of freedom to follow its own star, but it also made it tougher to finance development projects or pursue sales opportunities, he said.
"It was time for us to look for a partner who could help us accelerate our growth curve," Mr. Kirk said.
The deal came together while the two companies were working on a joint proposal to a company, Mr. Kirk said. He would not identify the prospect, except to say that it is "a new company in a new industry," and that the sale has not closed.
The proposal would involve Vicor software hosted by Metavante. He said he hoped to have a system in operation by the fourth quarter.
Cathryn R. Gregg, a partner at Treasury Strategies Inc., a Chicago consulting firm for banks, corporations, and other large organizations, said Metavante's backing could help drive sales for Vicor's lockbox systems in a market that is served mostly by small vendors.
"A big bank looking at a platform provider that doesn't have the strongest financials, that could be a concern," Ms. Gregg said. "Having Metavante behind them gives them additional financial underpinning."
Bob Meara, a senior analyst at the Boston research and consulting firm Celent LLC, said the deal for Vicor underscores "the strategic value of payments, certainly to Metavante and to the banking industry generally."
The deal also would give Metavante more relationships with large banks, rather than the small ones the vendor has historically served as an outsourcer, Mr. Meara said.
Other technology vendors that Metavante has acquired, such as the check-imaging company Vector SGI, now a part of its imaging division, also have big-bank customers, "but it's not treasury, not particularly exciting," Mr. Meara said. "By contrast, Vicor is state of the art, dot-Net, Web services."
