Stratus Buys a Foreign Retail Software Business

Furthering its acquisition drive into the software business, Stratus Computer Inc. announced last week it has purchased a retail banking-system business from a Canadian firm, in deal valued at $2 million.

Stratus officials said they acquired substantially all of the assets of London-based AST/Transact Ltd. from its parent, Toronto-headquartered SHL Systemhouse Inc.

London-based AST develops and markets retail banking application software and professional services to customers in the United Kingdom and continental Europe.

AST's main product is its UM20 electronic-funds transfer and credit card-processing software for retail banking. AST customers include banks and financial institutions in the U.K., Germany, Austria, and Switzerland, Stratus officials said.

"This acquisition represents a continuation of Stratus' strategy to invest in key market areas which we believe offer very high growth potential and in which Stratus provides considerable added value," said Kevin P. O'Keefe, Stratus vice president of application software.

As result of the AST deal and the acquisition last November of TCAM Systems Inc., Stratus will take a one-time, $7.8 million charge against earnings for purchased research and development costs, said Robert E. Donahue, chief financial officer. The charge, to be taken in the fourth quarter of fiscal 1994, would reduce earnings by about 31 cents a share for the year, he added.

Stratus executives said they planned to merge the AST unit with the U.K. operations of Stratus' recently formed S2 Systems Inc. subsidiary. The new unit is part of Stratus' effort to diversify its revenue stream into software and services, with less reliance on its mainstay business of "fault-tolerant" computer hardware that are used by many banks to run their automated teller machine networks and other transaction-intensive tasks.

Marlboro, Mass.-based Stratus recently hired long-time banking systems executive Robert E. Lund to run the S2 unit, which in addition to banking software, provides systems for retail, health care, and travel/transportation industries.

The subsidiary is expected to record more than $37 million in revenues in 1994, Stratus officials said.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER