Concord EFS Acquires Payroll Processor.
The merger of the companies will be completed in a stock transaction subject to regulatory approval and other closing conditions. The acquisition will not present a material addition to the total consolidated assets of Concord EFS. Management does not contemplate any accounting charge off associated with the transaction.
Dan Palmer, chairman and CEO of Concord EFS stated, "This strategic move will allow us to market payroll services across our existing customer base and have a differentiating product to market to new accounts going forward." Palmer added, "We also can utilize our bank subsidiary, EFS National Bank, to keep payroll processing cost to a minimum, increase our bank deposits from payroll deposits and tax withholding accruals and market new bank accounts to employees of these payroll customers."
Management believes the national market for payroll processing is in excess of 10 billion dollars. Third party processors currently serve approximately 40% of the total market (in payroll dollars), while the remaining 60% consists of businesses which continue to process payrolls in-house. Due to the implementation of the New Hire Reporting Requirements (effective Oct. 1, 1997) and the Electronic Federal Tax Payment System (effective July 1, 1998), small to medium size businesses (in terms of number of employees) are expected to begin switching to third party payroll relationships in order to comply with the new electronic filing and reporting requirements.
Concord EFS provides electronic transaction authorization processing, settlement and funds transfer services in select niche markets. Concord's primary activity is card processing services, which provides credit card, debit card and electronic benefit transfer (EBT) acceptance to small retailers, supermarkets and convenience stores. Concord EFS also provides direct deposit accounts to employees of its customers through EFS National Bank, its largest subsidiary.
CONTACT: Concord EFS Inc., Memphis
Edward A. Labry, 901/371-8000