development, global payment processor TSYS is set to transform into
a fully independent company, after parent company Synovus announced
that it would be disposing of its $4.7 billion stake (representing
80.8 percent of TSYS shares) at the end of December, pending
regulatory approval. TSYS, formed by Synovus in 1983, is the
largest third-party card processor in the US.
The move has major implications for the processing industry, as an
independent TSYS will be much better placed to take on First Data,
its larger rival in the processing space, and will be free to
pursue acquisitions in line with its stated objective of
international expansion. This could also result in a faster pace of
processor acquisitions in Europe, as both TSYS and First Data are
likely to chase after acquisition targets among an ever-dwindling
pool of national processors once SEPA is implemented.
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TSYS CEO Philip Tomlinson said: “What will be different is the
greater flexibility we will have with respect to planning and
executing our growth strategies.”
Nancy Atkinson, a senior analyst for US payment research
consultancy Aite Group, told CI that the spin-off makes sense for
TSYS. “TSYS will be able to set a better strategic direction as a
separate company from Synovus,” she said. “A large component of the
card processing growth is coming from Europe and other
international areas, so TSYS should make greater international
growth a priority. There are certainly still opportunities for card
processing in the US, but the real growth seems to be in other
markets. TSYS has some catching up to do in those markets.”
Good results
Another boost for TSYS comes in the form of its third-quarter
results, which show a 26.7 percent increase in net income over the
same period in 2006. Total revenues amounted to $457.6 million. For
the first nine months of 2007, TSYS’s total revenues were $1.3
billion, operating income increased 19.2 percent to $272.8 million
and net income increased to $191.8 million, an 18.3 percent
increase over the same period in 2006.
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