In a move that could expand its customer base to include banks and other financial institutions, Premenos Technology Corp. has acquired Prime Factors Inc.

Premenos of Concord, Calif., develops software for electronic data interchange, or EDI, the process of automating the exchange of business- related documents in standard computer formats. The company is in the forefront of Internet-based EDI.

Prime Factors makes encryption and authentication software for electronic funds transfers. Its customer list includes Citicorp, Chase Manhattan Corp., BankAmerica Corp., Visa International, and MasterCard International.

Premenos officials said the deal - the terms of which were not disclosed - will result in new EDI software for corporations and "especially financial institutions."

"Prime Factors' technical expertise in financial security will allow Premenos to continue to innovate and lead future electronic commerce solutions," said Lew Jenkins, chairman and co-founder of Premenos.

"This acquisition represents another key building block in Premenos' strategy of offering leading products in every significant area of electronic commerce," he said.

Mike Schwartz, who founded Eugene, Ore.-based Prime Factors in 1981, said the deal with Premenos grew from work the two companies have done together.

"We provide the technology for security, which can be unique to the financial EDI environment," Mr. Schwartz said. "We saw the obvious synergies."

Mr. Schwartz said he will oversee the process of integrating the two companies' technologies.

Blane Irwin, analyst at Forrester Research Inc. in Cambridge, Mass., said the deal makes sense for Premenos.

First, he said, it gives the company access to new technology and a new line of business. Second, Premenos may use banks and their cash management businesses as a way to reach more potential users of its corporate EDI products.

Premenos operates eight offices in Europe and North America and employs 200 people. Sales were $25.5 million last year, and the company recorded a net loss of $1.5 million.

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