First Data Contemplating Sale or Restructuring of Card Unit

DENVER – First Data Corporation, one of the two largest credit union card platforms, has signaled that it is unhappy with its card unit’s performance and may restructure or even sell it. The company alluded to that possibility in an announcement this week that it had hired a firm to assist it “in exploring various options for its U.S. credit card issuing business.” “This business continues to dampen the growth rates of the entire company, and maximizing shareholder value over the long term remains our top priority,” said Charlie Fote, chairman and chief executive officer.” The company went on to say that “based on the timing of any actions within the card segment, it is expected to continue to negatively impact First Data’s consolidated growth rates through the middle of 2006.” Wall Street analysts leaped on the idea that the company was looking for a buyer. Possible buyers mentioned in media reports include Fidelity National, a firm whose subsidiary Fidelity National Information Services is already merging with card processor Certegy. Metavante Corp, another card processor familiar to credit unions, has also been mentioned as a possible buyer. But Merry Pateuk, spokesman for PSCU Financial Services, a card cooperative which serves over 500 credit unions which use the First Data platform, said that First Data has made similar noises before and that the company then has opted in previous years to restructure its card operation rather than sell it. “Of course no one knows what is going to happen,” Pateuk said, “but we have a long-standing relationship with First Data and I think it’s important to put this news in the context that the company has said similar things before.” Colin Wheeler, spokesman for First Data, declined to say anything other than from the press release and confirmed that the card business was being evaluated both for possible sale and for possible restructure. “All options are on the table,” he said.