Gulfnet Inc., a medium-size electronic banking network that stubbornly resisted consolidation pressures, has finally succumbed to the inevitable.

The Louisiana-based company agreed in principle last week to accept an acquisition bid from Pulse EFT Association of Houston, a top-five network moving to ensure it is one of the long-term survivors.

The resulting system will connect more than 29,750 automated teller machines and 115,000 point of sale locations in eight states, from Tennessee and Mississippi in the East to Colorado and New Mexico in the West.

"I truly believe everyone will benefit from this merger," said Gulfnet president Del Tonguette, who was a strong advocate of network consolidation even as his own organization was spending the last few years vacillating over its options.

The 309 Gulfnet member financial institutions-more than half of them already part of Pulse-"will get more business, better service, better education and marketing efforts, and greater efficiencies," Mr. Tonguette said.

The pairing comes as no surprise. Gulfnet serves five states, Pulse seven, and they overlap in four. They signed a joint marketing arrangement in 1995.

Gulfnet has 11,850 ATMs and is 12th in total monthly network transactions, at 3.3 million. The system was on the selling block three years ago, but a deal with the Florida-based Honor System fell through.

Houston-based Pulse, the fifth-largest network, will increase its numbers relatively slightly but will tighten its hold on the region that includes Texas, Louisiana, and Oklahoma. The combined network will serve 1,854 members and process 21 million transactions a month.

Sources said Pulse defeated three other contenders for Gulfnet: Electronic Payment Services Inc., Wilmington, Del., which owns the MAC network; Midwest Payment Systems, the transaction processing unit of Fifth Third Bancorp in Cincinnati; and Magic Line Inc. of Dearborn Mich.

Electronic Payment Services reportedly made it to the final cut, but Pulse had the clearer strategic mandate.

"Defaulting the Louisiana and Mississippi markets would have resulted in the erosion of the value of Pulse," said Stan Paur, president of the Houston-based organization. "Our network had a substantial presence in that area. We wanted to protect that base."

As size has become equal to power in the consolidating network game, the deal strengthens Pulse's hand.

Gulfnet's will keep its Slidell, La., headquarters after the merger, which is expected to be completed by yearend, and its brand name will remain for two years, Mr. Tonguette said.

But he has decided to step down and "hopes to get involved in a start-up operation." Though he plans to stay in the electronic funds transfer industry, he will steer clear of ATM networks.

He said the myriad of network brand names cause confusion for consumers and serves little purpose. Eventually, Mr. Tonguette said, branding will come down to two-Visa and MasterCard. Regional switches will remain to provide member services and education, but will be invisible to the consumer.

Liam Carmody, president of Carmody & Bloom, a Ridgewood, N.J.-based consulting firm, said the Southwest merger "makes a lot of sense" and "keeps Pulse as a player."

Mr. Carmody pointed out that Texas and Louisiana share the same coastline, oil-business interests, and even air-traffic patterns. He likened the New Orleans-Houston corridor to that of New York-Boston.

Also making for a good match, Mr. Paur said, is the fact that 80% of Pulse members have less than $500 million of assets. Pulse's chairman, Jimmy Seay, hails from $80 million-asset City National Bank of Mineral Wells, Tex.

This merger leaves two huge networks across the southern part of the country, with Honor covering the East from Florida to Virginia, and Pulse going as far West as the Rocky Mountains.

Observers see the Midwest as the next consolidation hotbed. Magic Line's bid for Gulfnet indicates its lust for growth. After Magic Line merged with EFTI in Illinois last August, president John Bascomb said the company is vying to compete with its biggest counterparts. u

Gulfnet Inc., a medium-size electronic banking network that stubbornly resisted consolidation pressures, has finally succumbed to the inevitable.

The Louisiana-based company agreed in principle last week to accept an acquisition bid from Pulse EFT Association of Houston, a top-five network moving to ensure it is one of the long-term survivors.

The resulting system will connect more than 29,750 automated teller machines and 115,000 point of sale locations in eight states, from Tennessee and Mississippi in the East to Colorado and New Mexico in the West.

"I truly believe everyone will benefit from this merger," said Gulfnet president Del Tonguette, who was a strong advocate of network consolidation even as his own organization was spending the last few years vacillating over its options.

The 309 Gulfnet member financial institutions-more than half of them already part of Pulse-"will get more business, better service, better education and marketing efforts, and greater efficiencies," Mr. Tonguette said.

The rapid consolidation of automated teller machines networks continued last Friday as Pulse EFT Association and GulfNet Inc. announced an agreement to merge.

The pairing comes as no surprise. Gulfnet serves five states, Pulse seven, and they overlap in four. The two networks cover much of the same territory in the South and Southwest. They signed a joint marketing arrangement in 1995. and nearly half of GulfNet's 311 members are also members of Pulse.

Gulfnet has 11,850 ATMs and is 12th in total monthly network transactions, at 3.3 million. The system was on the selling block three years ago, but a deal with the Florida-based Honor System fell through. With passing time and more aggressive pressure from big bank members, GulfNet, which posts 3.3 million transactions per month, has 16% annual growth and a presence in five states-mainly Louisiana and Mississippi- succumbed to the inevitable.

Houston-based Pulse, the fifth-largest network, will increase its numbers relatively slightly but will tighten its hold on the region that includes Texas, Louisiana, and Oklahoma. The combined network will serve with 29,750 ATMs and 115,000 point of sale locations, will serve 1,854 members and process 21 million transactions a month.

Sources said Pulse defeated three other contenders for Gulfnet: Electronic Payment Services Inc., Wilmington, Del., which owns the MAC network; Midwest Payment Systems, the transaction processing unit of Fifth Third Bancorp in Cincinnati; and Magic Line Inc. of Dearborn Mich.

Electronic Payment Services reportedly made it to the final cut, but Pulse had the clearer strategic mandate.

"Defaulting the Louisiana and Mississippi markets would have resulted in the erosion of the value of Pulse," said Stan Paur, president of the Houston-based organization. "Our network had a substantial presence in that area. We wanted to protect that base."

As size has become equal to power in the consolidating network game, the deal strengthens Pulse's hand.

Gulfnet's will keep its Slidell, La., headquarters after the merger, which is expected to be completed by yearend, and its brand name will remain for two years, Mr. Tonguette said.

But he has decided to step down and "hopes to get involved in a start-up operation." Though he plans to stay in the electronic funds transfer industry, he will steer clear of ATM networks.

He said the myriad network brand names cause confusion for consumers and serve little purpose. Eventually, Mr. Tonguette said, branding will come down to two-Visa and MasterCard. Regional switches will remain to provide member services and education, but will be invisible to the consumer.

Liam Carmody, president of Carmody & Bloom, a Ridgewood, N.J.-based consulting firm, said the Southwest merger "makes a lot of sense" and "keeps Pulse as a player."

Mr. Carmody pointed out that Texas and Louisiana share the same coastline, oil-business interests, and even air-traffic patterns. He likened the New Orleans-Houston corridor to that of New York-Boston.

Other similarities make the two networks a good match. Also making for a good match, Mr. Paur said, is the fact that 80% of Pulse members have less than $500 million of assets. Pulse's chairman, Jimmy Seay, hails from $80 million-asset City National Bank of Mineral Wells, Tex.

This merger leaves two huge networks across the southern part of the country, with Honor covering the East from Florida to Virginia, and Pulse going as far West as the Rocky Mountains.

Observers see the Midwest as the next consolidation hotbed. Magic Line's bid for Gulfnet indicates its lust for growth. After Magic Line merged with EFTI in Illinois last August, president John Bascomb said the company is vying to compete with its biggest counterparts.

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