NYCE Offered $40 Million for CU24; PULSE, NYCE Now Trying to Woo CU24 Members
NEW YORK - CU24, which is in the midst of a merger with Concord, had many suitors, among them NYCE and PULSE. According to an authoritative source with New York-based NYSE Network, NYCE made a $40 million bid for CU24, $10 million more than the bid Concord reportedly offered. The...
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NEW YORK – CU24, which is in the midst of a merger with Concord, had many suitors, among them NYCE and PULSE. According to an authoritative source with New York-based NYSE Network, NYCE made a $40 million bid for CU24, $10 million more than the bid Concord reportedly offered. The leadership of NYCE would not discuss the details of the bid, but did confirm that a bid had been placed and maintained that it was “better financially” than the offer Concord reportedly made. The leadership also confirmed that the bid had been made through the “auspices” of PSCU Financial Services, an arrangement that had been meant to help guarantee credit union control of the network even as it might have been bought by another for-profit firm. David Serlo, CEO of PSCU Financial Services, said that PSCU had been partnered with NYCE for about a year, ever since its processor, First Data Resources, obtained a controlling interest in NYCE. Even before the prospect of a purchase of CU24 had come up, PSCU had already been offering ATM processing and switching services through what it has called its “total debit solution,” Serlo said. That business, and the fact the PSCU is credit union-owned, drew NYCE’s attention, he explained. While citing confidentiality agreements, Serlo said that had the NYCE bid succeeded, CU24, PSCU and NYCE would have sat down to resolve the day-to-day governance issues and said that PSCU’s place at the table would have been to make sure that credit union interests were represented. The NYCE deal officially missed the deadline that the CU24 Board had set for bids to reach the consultant firm that CU24 hired to initially evaluate bids, the source said, but added that the New York firm had been late by no more than a few days. David Lynch, President of NYCE, confirmed that the deal had been late and added that it felt awkward to try to work through the consultants. “I understand why they did it that way, to keep personalities out of it, but sometimes people and personalities are an important part of how business gets done,” he noted. But the missed bid has not ended the story and NYCE, like the other firms that run ATM Networks, is poised to enter a spirited competition to see if any CU24 members can be lured away from Concord, even before the sale is complete. The NYCE source reported that the network for example, with 1,100 credit union customers already, had a draft letter to CU24 members to offer them NYCE services, a fact Lynch confirmed. Other Networks Offer Participations One of NCYE’s competitors for the attention of CU24 members is the PULSE EFT Association, a Houston, Texas-based organization of over 3,700 banks, thrifts and credit unions. Pulse confirmed that it has been sending out letters to CU24 member credit unions, inviting them to become part of PULSE. Among the benefits PULSE is touting is a $.045 switch fee, the lowest of any shared EFT program in the country, Pulse claimed, along with “non-discriminatory” pricing, according to a letter dated January 23. The association also confirmed that it had been a bidder in the competition to buy CU24. “At the direction of our board, PULSE submitted a proposal to CU24 that would preserve the separate and unique status of CU24 while ensuring a successful transition at little or no cost to CU24 participants,” a letter dated February 4 read. PULSE CEO Stan Paur said the bottom line behind the letters was that PULSE was convinced it offered credit unions a unique and viable alternative and that “times of change,” like the one currently engulfing CU24, offered PULSE opportunities to make its case. He also emphasized the participation of credit unions in PULSE was more than token, noting that six prominent credit union leaders serve on PULSE’s board. According to the association, Richard Ensweiler of the Texas Credit Union League, along with CEOs from the $589 million Royal Credit Union in Eau Claire, Wisconsin; the $864 million Government Employees Credit Union of El Paso; the $2.7 billion Security Service Federal Credit Union of San Antonio; the $1.9 billion Randolph-Brooks Federal Credit Union, also of San Antonio; and the $3.8 billion American Airlines Federal Credit Union based in Dallas; are on the association’s board of directors. In the February 4 letter, PULSE claimed that it had been involved in “discussions” with the management of CU24 “regarding a possible strategic transaction.” Those discussions ended, the association said, when CU24 decided to hire a consultant and take bids. PULSE claimed it then submitted a bid that spoke to “the priorities identified by CU24′s request for proposal.” “PULSE, and in particular the credit unions represented on our Board of Directors, believed that because of the similarities between PULSE and CU24, both in management philosophy and operating principles, our not-for-profit association would have a strong appeal to CU24 and its membership,” the association wrote, adding “we were disappointed that our proposal did not appear to receive serious consideration.” CU24′s management has refused to discuss the details of the Concord offer for the network or other offers the Board considered, citing legal requirements for non-disclosure. But CU24′s CEO, Jim Park, noted that letters such as PULSE’s are always “part of the picture” whenever there is a merger or sale or purchase announced. The ATM networking and EFT industries are very competitive, he noted, and in such a competitive atmosphere such letters are just part of what we expect, he said. PULSE pointed to its record in acquiring other EFT Networks as evidence of its ability to work well with CU24 members. In acquisitions of GulfNet, Money Station and TYME, since 1997, the association claimed they reduced participation costs, increased revenues per transaction, gave participants in the acquired networks “meaningful representation” on its Board and provided them ongoing white papers and other research at no cost. PULSE said it was still interested in accommodating CU24 members’ concerns about governance while bringing lower fees and higher revenues. While PULSE’s letters have been among the more revealing that have circulated, the Texas based association is not alone in pursuing CU24 member credit unions. The Leesburg, Virginia-based Encore Cooperative, a cooperatively owned organization that offers its members cooperative pricing on EFT services, ATM switching and processing services and shared branching services, currently has a letter out aimed at credit unions that might be shopping for a new processor in the wake of EDS Consumer Networking’s Purchase by Fiserv. But CEO Thomas Reed said the 110-member cooperative was also contemplating another letter aimed at CU24 members. “Encore is a cooperative created for credit unions, by credit unions. There are credit unions in seven states taking advantage of the cooperative pricing, which is available under the Encore program,” the January 24 letter said. “We think we definitely offer CU24 an alternative for obtaining their ATM services at competitive prices without losing their credit union control,” Reed said. All this stands in sharp contrast to CO-OP Network, which has steadfastly refused to either discuss its offer for CU24 or to solicit membership from them generally, although the Ontario, California, based Network has said that it is willing to talk to CU24 members who might approach with questions about CO-OP Network products and services. -
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