Metavante Corp. has found an unusual buyer for its unprofitable M&I EastPoint Technology Inc. subsidiary: a group of six of its roughly 100 customers.

The Marshall & Ilsley Corp. unit announced a definitive agreement Friday to sell the provider of client/server core banking technology to a newly formed consortium of six financial institutions. The new company would be called EastPoint Technology LLC and be headquartered in Bedford, N.H.

Metavante’s search for a buyer had been under way for months. It first came to light in a Dec. 18 American Banker article that cited a letter in which Metavante said it had decided to divest the business and had hired Donaldson, Lufkin & Jenrette Securities Corp. to help evaluate its options.

Joseph L. Delgadillo, Metavante’s president and chief executive officer, heralded the deal as a “fitting” conclusion. “We recognized that our clients liked the products and services EastPoint delivered,” he said.

Metavante officials did not comment beyond statements provided in a press release. A spokesman said the company could not disclose the participating banks or the price of the transaction because those matters are based on regulatory approval.

A close observer of the data processing industry offered this opinion about the nature of the agreement: “I don’t think there was a buyer out there, such as an independent software company, that would take EastPoint,” said M. Arthur Gillis, president of Computer Based Solutions Inc., a consulting firm in Dallas. “Those that had the biggest investment and incentive were indeed those who were already using the system.”

Metavante, formerly M&I Data Services, bought the software firm in 1996 when small and midsize banks were expected to move away from using mainframes and minicomputers to run their back offices. However, according to Mr. Gillis, fewer than 2% of banks have opted for client/server systems, a contributor to net losses at the unit since M&I bought it.

The deal is another move toward Metavante’s stated goal of investing in new market opportunities. Since early last year Metavante, whose traditional business is payment and data processing, has been building up its expertise in electronic commerce, especially electronic bill payment and presentment. Last month it bought two EBPP companies, Atlanta-based Derivion Corp., a provider of electronic billing software to corporations, and CyberBills Inc. of Santa Clara, Calif., which sells EBPP technology to consumers and financial institutions.

“EastPoint had not been working out well for them from a strategic standpoint,” said Brian M. Harvey, an analyst at Fox-Pitt Kelton Inc. in New York. “Now they can take the capital from EastPoint and redeploy it into a faster-growing business.”

With its EBPP acquisitions, “Metavante is ensuring that it will be among the leaders in providing superior solutions for electronic commerce, such as electronic bill presentments and payment,” Jacqueline Reeves, an analyst at Boca Raton, Fla.-based Putnam Lovell Securities Inc., wrote in a June 1 report.

“After extensive meetings with the management of both Marshall & Ilsley and Metavante … we have an overall positive impression about the future of the … franchise,” she said.

Joseph Marino, an analyst at Current Analysis of Sterling, Va., said the longstanding payment processing relationships that Metavante has formed with banks give it an edge in electronic commerce, which “no doubt is going to take off.”

Electronic commerce “certainly should become a viable line of business in addition to Metavante’s other lines,” he said, adding that “returns on these technology investments are usually longer-term.”

Not everyone agrees that Metavante should be pursuing strategies based on cutting-edge technology.

“My concern is that the marketplace may not be moving as fast as they are,” Mr. Gillis said. “Metavante may be perfectly equipped to take care of the new technologies, but the demand won’t be there. They are spending money that they are going to have a big problem getting a return on.”

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