An analyst is predicting that Synovus Financial Corp., which owns a majority stake in Total System Services Inc., is planning to spin off the processor very soon.
Anthony R. Davis, an analyst at Ryan Beck & Co., a subsidiary of BankAtlantic Bancorp Inc., wrote in a research note Monday that a spinoff is "imminent" and may be announced this month or in the current quarter.
Synovus, a Columbus, Ga., banking company, is to release its fourth-quarter results on Jan. 17, but Mr. Davis wrote, "Rather than earnings trends, we believe the more important issue at TSYS is the status of SNV's 81% ownership interest. Our sense is that until TSYS is an independent company, it will not be positioned to pursue the acquisitions so crucial to sustaining and diversifying its revenues."
A Synovus spokesman declined to comment.
Mr. Davis and other analysts have long said that a TSYS spinoff makes sense, and Synovus has confirmed that it is reviewing the idea. In September, Richard Anthony, the president and chief executive of the $30.5 billion-asset banking company, said he was accelerating the review, though he did not say when a decision would be made.
Larry Berlin, an analyst at First Analysis Securities Corp. in Chicago, said he had not seen Mr. Davis' report nor heard that a TSYS spinoff is imminent, but "we've been waiting for something from … [Synovus] forever, and for them to make a decision," he said.
TSYS' management has long wanted to be independent because "TSYS, in terms of using their own stock for acquisitions and other things, has been hamstrung because of the ownership structure," Mr. Berlin said.
Large investors have not taken TSYS seriously because too much of its stock was unavailable to them, he said, adding that being independent could only benefit it. Synovus is probably not facing resistance to a spinoff from its own investors.
"For the Synovus shareholder, it shouldn't matter" if TSYS is spun off because those shareholders would still own part of it, Mr. Berlin said. "It should be a positive."
A spinoff of TSYS "is more likely now than it has been for a while," Mr. Berlin said, but "that doesn't make it likely." Calls to TSYS were not returned Monday.
Monday afternoon Synovus' share price was up 0.36%, at $30.72, and TSYS' stock was unchanged from Friday's close at $25.96.
