The Independence Bell Rang For Metavante on 11.2.07 With Its Spin-off From M&I

Implications: Six months after M&I announced the spin-off of its payments processor Metavante, 11.2.07 serves as Metavante's intro as a spin-off from M&I under the name of Metavante Technologies (MV) and the NYSE welcomed its newest listee at the ceremonious ringing of the bell. The spin-off is a $4.25 billion transaction, including debt and Warbug Pincus invested $625 million to gain a 25% stake in MV. In 2006, Metavante's NYCE EFT Network accounted for 40% of M&I's revenue and the network may be worth more than $1 billion or almost twice the $610 million Metavante paid for it in 2004. MV is also planning a big international push with its Prepaid Solutions Division to go after its share of the prepaid cards transaction volume growth which is projected to reach $178 billion in the US by 2010 and with its international push in Europe, Asia-Pacific and other countries, MV will attempt to capture market share of global prepaid cards transaction volume which could reach $2 trillion by 2010.

Analysis: Metavante Technologies officially spun-off from M&I on 11.2.07 and began trading on the NYSE under ticker MV. The Metavante spin-off may be a way to increase value for M&I's shareholders due to possible shareholder pressure for a higher stock price. The spin-off may allow both companies to focus on their core businesses and position both companies for future growth. At the same time, as an independent company Metavante Technologies may be a tempting takeover target either for other processors and/or private equity firms who may be looking to accumulate assets in electronic payments. Metavante's NYCE EFT (Electronic Funds Transfer) Network has also blossomed in value as a result of the steady growth of debit cards transaction volume, which may  bode well with MV's expansion plans into the prepaid cards market.

1.  Metavante has spent over $1.5 billion over the last few years to acquire 17 companies to compete more effectively, streamline operations, create synergies across their enterprise and to expand its cross-sell and up-sell efforts

2.  Metavante may operate one of the widest range of processing solutions in the electronic transactions space, including check-imaging solutions, image exchange, merchant acquiring, online bill payment, gift card processing, mobile payments, ACH (Automated Clearing House), EFT debit and prepaid cards

Metavante Technologies appears to be well positioned to profit from the strong growth in e-payments and banking overall, as well as the ability to create unique products and services for their bank and corporate clients. Metavante Technologies joins a growing list of payments processors either spun-off or bought out in 2007, as consolidation continues in the industry.