JACKSONVILLE, Fla. -- Fidelity National is continuing topurchase its way to becoming the largest company in the center ofthe credit union card industry, announcing on June 27 that it hasinked a deal to purchase eFunds, one of the largest processors ofEFT transactions.

The cash deal will be valued at roughly $1.8 billion, the firmssaid. Under the terms of the agreement, eFunds shareholders willreceive $36.50 in cash for each share of common stock.

"The acquisition of eFunds provides FIS with greater scale,extends our presence in the U.S. and international banking markets,and expands the distribution channel for our core processing andrisk analytic services," said FIS Executive Chairman William P.Foley II.

"We believe this is a very attractive transaction for ourshareholders," stated Paul F. Walsh, eFunds chairman and CEO. "Wehave been very impressed by FIS' success in assimilating a numberof acquisitions in a relatively short period of time, and believethat our customers will benefit from the extensive product set andindustry expertise that the combined companies have to offer."

The transaction is expected to be completed by the end of thethird quarter of 2007, subject to certain regulatory approvals,approval by eFunds shareholders and customary closing conditions,the firms said in a prepared statement.

The announcement swiftly rippled through the credit union cardprocessing industry. FIS only recently confirmed that it hadpurchased Asset Exchange, a leading broker of credit union creditcard portfolios.

"This announcement was not unexpected," Stan Hollen, CEO ofCO-OP Financial Services, said in a prepared statement. "I havecalled executives at both eFunds and FIS congratulating them onthis new relationship and expressing the support of CO-OP FinancialServices. In turn they expressed their support for CO-OP FinancialServices and a commitment to our initiatives."

CO-OP has long processed its EFT transactions with eFunds andhas recently announced an intention to get into credit cardprocessing as well. At the time of that announcement thepresumption was that it would do so with another processor since,at that time, eFunds did not process credit card transactions.

Hollen said that CO-OP has worked with FIS since October 2006when FIS agreed to market and promote access to CO-OP Network astheir primary source of access to surcharge-free ATMs. FIS has hada long involvement with credit unions and is a supporter of manycredit union causes, Hollen noted.

"CO-OP looks forward to building relationships with technologypartners, such as eFunds and Fidelity, to provide best in classpayments services to credit unions," he added.

But CO-OP sources said the ATM and EFT CUSO will be lookingclosely at the FIS/eFunds deal and seeking to discern what it willmean going forward with its own plans to keep shifting the firmaway from being solely the parent of its well known fee-free ATMnetwork.

CO-OP has clauses in its contract with eFunds that cover thingslike ability to leave if ownership of the firm changes and hascontrol over the database of its members and their transactions,sources said.

If federal regulators and company stockholders approve thepurchase, Fidelity National Information Services' purchase ofeFunds will leave FIS as the biggest overall card processor servingcredit unions.

The firm's acquisition of Certegy in early 2006 left it themajor credit union credit card processor and now the purchase ofeFunds will make sure it will have the same role in the market fordebit card transactions that are validated by both cardholdersignatures and personal identification numbers.

But while some might suppose such market dominance might triggera review of the purchase by the U.S. Justice Department, industrysources downplayed any anti-trust concerns. They noted that theoverall credit union market is small enough, when compared to theoverall market for financial institution card transactions, thatmarket dominance among credit unions will not translate to marketdominance overall.

"It's true that the company will become the largest cardprocessor for credit unions," one industry analyst noted, "butthere is still enough competition in the overall market fortransactions that I don't expect the Justice Department will getinvolved."

Of course that being said the deal will still leave FIS as thedominant player in the credit union card processing space.Essentially, if the deal goes through, FIS will be able to offercredit unions the ability to process all their card transactions,credit debit and ATM/EFT, through one processor, potentially make astrong case for some sort of processing switch on the grounds ofincreased efficiency or improved pricing.

For its part, FIS has remained silent on the topic except forits official statement. Some of its executives were on vacationwhen the news broke and the company may not be able to add muchbecause of federal regulations on communication in advance of anyshareholder voting. Other processors in the market also generallydeclined to comment on the purchase except to note that they werewatching it and that they welcomed the competition.

[email protected]