Tandem Computers Inc. has agreed to sell a software subsidiary, Applied Communications Inc., to ACI's senior management.
ACI, which had revenues of over $70 million in 1992, is the world's largest supplier of electronic funds transfer software to run on Tandem computers, which are commonly used by banks for automated teller machine networks, and for credit card and point of sale processing.
Tandem, based in Cupertino, Calif., said it was selling its interest in the subsidiary, after buying it from U S West a little over two years ago, because the unit is now profitable enough to stand on its own.
Under the agreement, Tandem will sell all the outstanding capital stock of ACI, based in Omaha, and ACI Ltd., based in the United Kingdom, for an undisclosed amount of cash. The sale, subject to approval by outside investors, is slated to close on Dec, 31.
Buyout by Chief Rival
The sale comes just a few months after Stratus, Tandem's biggest rival, bought one of ACI's biggest competitors, Shared Financial Systems Inc. in Dallas.
Officials of ACI said the sale of ACI should not hurt its competitiveness, but will enable it to diversify its product line to run on other vendors' computers. Today, virtually all of ACI's software runs exclusively on Tandem computers.
"As we look forward, we know our future is open systems," said William Fisher, president of ACI.
ACI is several times larger in terms of revenues from EFT software sales than Shared Financial Systems and its other main rival, Deluxe Data Systems, an ACI official said. ACI has 300 customers, with the majority in financial services.
Short-Term Strategy
Tandem, which bought ACI in 1991 from U S West for just under $60 million, intended to own the company only for a short time, according to company officials.
"We didn't see ACI flourishing under U S West ownership, so we decided to acquire them to protect our joint customer base," said Chip Greenlee, manager of finance industries at Tandem.
Mr. Greenlee said ACI had been only marginally profitable when Tandem acquired it. ACI "is quite profitable now, and the product base is strong and growing," he said. "But it's never been part of our overall strategy, to run our own software partners."
Mr. Fisher said that under U S West's ownership, the company had been increasingly put to work to develop telephone company systems. "Tandem wanted us to stay focused on the banking industry," he said.
Banking Sector Sales Revived
Mr. Fisher said ACI had helped Tandem rejuvenate the banking sector of its market at a time when sales were lagging.
Before its acquisition by U S West in 1987, ACI had been independent.
The move will allow ACI to develop software for other plat-forms. Mr. Fisher said the company will continue to develop primarily for Tandem computers, but that it is now evaluating Microsoft Corp.'s NT operating system with an eye to developing for it.
ACI is also interested in developing for Unix and IBM operating systems.
ACI employs about 600 people around the world.
