Cardtronics Buys All 5,500 7-Eleven C-Store ATMs, Kiosks

  Cardtronics Inc. in June reached an agreement to purchase all of 7-Eleven Inc.'s U.S. ATM operations for $135 million in cash. The deal makes Cardtronics the world's largest nonbank owner of ATMs, the company says.
  The agreement adds more than 5,500 high-volume ATMs and financial-services kiosks, or Vcoms, to Cardtronics' U.S. operation, says Jack Antonini, Cardtronics president and CEO.
  At the end of the first quarter, Cardtronics, which is based in Houston, owned or managed 25,228 ATMs, making it the largest nonbank owner of ATMs in the United States, according to its first-quarter earnings report. Adding 7-Eleven's ATMs and kiosks, Cardtronics now owns approximately 30,728 machines in the U.S., Mexico and the United Kingdom. Cardtronics owns Cardtronics Mexico in Mexico City, Bank Machine Ltd. in the UK and the Allpoint surcharge-free ATM network in the U.S.
  TRM Corp., the second-largest nonbank owner of ATMs, is now far behind Cardtronics. TRM, which is based in Portland, Ore., owns 10,600 ATMs in the U.S., says Richard Stern, TRM chief operating officer and incoming president and CEO.
  The agreement advances Cardtronics' goal, Antonini says. "Acquiring the 7-Eleven ATM portfolio is a natural extension of our strategy to partner with major retailers in high-traffic locations," he says.
  Dallas-based 7-Eleven has ATM-branding agreements with Citibank, Co-op Financial Services and Financial Services Center Cooperative for Credit Unions. It sold its ATM portfolio to invest in its business, says Margaret Chabris, a company spokesperson.
  "We can use the money to remodel our stores," Chabris says. 7-Eleven is the world's largest convenience-store chain in terms of store locations. It franchises or licenses 7,200 stores in the U.S. and 32,300 stores worldwide. In 2006, 7-Eleven generated $44 billion in sales.
  7-Eleven purchased its ATM portfolio from American Express Co. in August 2004, and the convenience-store chain introduced Vcoms in February 1998, Chabris says.
  "The acquisition will provide a significant boost to Cardtronics' transaction volume while simultaneously moving Cardtronics into a leadership position in offering advanced, nontraditional financial services via advanced functionality kiosks," Antonini says.
  Approximately 2,000 of 7-Eleven's U.S. ATMs are Vcom terminals, which support such advanced functions as check cashing, bill payment and money transfers, in addition to traditional cash withdrawals and balance inquiries.
  But the Vcoms have not always been what they were touted to be, says Francie Mendelsohn, president and founder of Summit Research Associates, a kiosk-consulting firm.
  "Some of them had a nasty habit of eating people's checks," Mendelsohn says. "It wasn't every Vcom, but then it doesn't have to be many before word gets out and people stop using them."
  Despite past problems, Cardtronics' purchase gets the company into the kiosk business. "It's not a small deployment, but it won't take your breath away," Mendelsohn says.
  The agreement includes a 10-year exclusive right to operate all of the ATMs and advanced-function, self-service kiosks in existing 7-Eleven locations throughout the U.S. and any new 7-Eleven locations nationwide.
  "The 7-Eleven footprint nicely complements our existing base of deployed machines and strengthens our presence in key geographies while further solidifying Cardtronics' position as the ATM provider of choice for national merchants," says Brian Archer, Cardtronics executive vice president.
  Cardtronics also will assume ownership or operations of all ATM and Vcom equipment owned or leased by 7-Eleven as well as maintenance, cash replenishment, processing, customer service, 24-hour monitoring and other operational functions for the machines.
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