"03 April 2008 - 15:05 Keycorp sells Canadian unit; buys Stepnexus subsidiaries
Australian e-payments vendor Keycorp is selling its Canadian unit to bank-backed Moneris in a cash deal worth around A$7.2 million. At the same time the Sydney-based firm, as part of a new joint venture consortium, has bought the UK subsidiaries of Stepnexus, owner of the Multos multi-application smartcard operating system. The Moneris deal is expected to close by the end of April, subject to final due diligence.
Montreal-based Keycorp Canada employs approximately 300 people, providing point-of-sale service and support to small and large customers across the country. It also offers technical service and support to several Canadian acquirers, systems providers and merchants.
Keycorp says the A$7.2 million offer is "significantly higher than the expected net present value of earnings over the next two years for the Canadian business".
"The premium being paid in excess of net assets is a reflection of the management, time and cash invested by Keycorp in the Canadian subsidiary, and provides good value to Keycorp and its shareholders," says Keycorp CEO Ken Carr.
Keycorp says it will now focus on services business and strategic growth in Australasia and Asia Pacific.
In a separate move Keycorp says it is teaming with Hitachi and Mondex to buy the UK subsidiaries of StepNexus, which owns the Multos multi-application smartcard operating system.
StepNexus is a holding company of the Multos technology, which was acquired by a consortium consisting of Oak Hill Venture Partners, Hitachi Keycorp and MasterCard International in November 2005. The holding company was established in the US and in the UK.
Under the deal KeyCorp will acquire the UK operations - StepNexus and Maosco - along with additional intellectual property rights and registered patents. This new joint venture consortium will also operate the UK-based Key Management Authority (KMA).
Pursuant to the deal, Keycorp will relinquish its existing shareholding in StepNexus and pay the holding company US$1 million.
After completion of the deal, expected within 30 days, Keycorp and Hitachi will each hold 40% of the shares in the new venture, with Mondex having a 20% shareholding.
Carr says the deal "provides an opportunity to further strengthen our smartcard technology credentials".
"Building on our foundation of success in the banking market, particularly in the emerging contactless transaction technology, we will begin to focus this business on the expansion of Multos," he says."
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