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Eltna Corp.,the original equipement manufacturer for Tranax Technologies Inc.,one of the nation's largest off-premise ATM deployers, on Monday purchased Tranaxfor an undisclosed price. The deal continues a shake-up among manufacturers ofoff-premise ATMs, which primarily are found in restaurants, drugstores, supermarket and gas stations. In the past three months, some of the largest off-premise manufacturers either have been acquired or did the acquiring. Nautilus Hyosung Inc., Tranax's formerpartner and now archrival, is scheduled to complete its purchase later this month ofTriton Systems of Delaware Inc., a Long Beach, Miss.-based off-premise ATM manufacture (ADN, 7/31).
Nautilus Hyosung shipped 14,433 ATMs in 2007, making it the
largest off-premise ATM manufacturer, according to ATM&Debit News surveys.
Triton shipped 10,454 ATMs last year, making it second largest. Tranax rounded out the top three, shipping 9,000 machines in 2007.
Off-premise ATMs are a $100 million-a-year industry, and ATM owners replace 30,000 machines annually, observers say (ADN, 7/31). Five years earlier the market was $150 million. The size of the market declined because Nautilus Hyosung cut prices as much as 40% to gain market share, and other companies followed its lead. Offpremise ATM manufacturers charge ISOs $2,500 to $3,000 per machine.
Eltna's purchase of Tranax probably will extend the price war, which will make ISOs
happy because another major competitor assures them the buyers' market continues,
says Leon Majors, president of Salisbury, Md.-based Phoenix ESP Payments Research
Group.
"We will see how badly [Eltna] wants to fight in this market," Majors says. "We
could see more blood in the water. I thought the price war might be over by BAI
Retail Delivery [Nov. 18-20]." At the same time, however, off-premise ATM manufacturers may experience trouble making money, although Nautilus
Hyosung says it is doing fine, Majors says.
Opinion varies on how much of the offpremise market a combined Nautilus
Hyosung and Triton would control. Estimates range from 65% to 85%. Eltna's purchase of Tranax gives Tranax a stronger financial footing and access to better designs to compete with Nautilus Hyosung, says Jeffrey Lee, Tranax director
of product management. "Eltna is involved in ATM design and manufacturing for
other companies, but it never has had a presence in the U.S. Tranax gives it a U.S.
presence," Lee says.
Tranax's sale indicates the off-premise ATM market is healthy, says a sales executive from Nautilus Hyosung America Inc., the Coppell, Texas-based subsidiary of the Nautilus Hyosung Inc. "The purchase of Tranax is further evidence of a healthy
amount of competition in the off-premise ATM market, which will ensure better products and pricing for customers," Carlos Siewczynski, Nautilus Hyosung America Inc.'s vice president of the North American Retail Self-Service Division, wrote
ATM&Debit News.
Eltna is held privately by a Seoul, South Korea-based holding corporation with
companies in ATM systems, components, imaging, design and manufacturing.
In the last two years since Newark, Calif.-based Tranax had a highly publicized
split with South Korea-based Nautilus Hyosung, Eltna served as Tranax's original
equipment manufacturer of ATMs and ATM parts.
"We are very pleased to announce the merger of Tranax into the Eltna group of
companies," Hansup Kwon, Tranax cofounder, president and CEO, said in a statement. "Joining forces with Eltna enables us to form a strong, new vertically integrated company with direct manufacturing and best-in-class ATM components and systems. The new entity will continue under the Tranax name in order to leverage the company's strong brand name and reputation."
Won-Gee Lee, Eltna CEO, will assume the additional title of Tranax CEO, following
a transition period. Tranax also plans to replace its chief financial officer with someone of Eltna's choosing. Kwon joined Tranax's board of directors, and his wife, Heemook Kwon, Tranax's co-founder and vice president of corporate development, will continue in that capacity and as a Tranax board member.
"We believe the new vertically integrated company-with direct manufacturing, product know-how and the depth of market experience that Tranax brings-will create a strong new Tranax," Won-Gee Lee said in a statement.
