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Deluxe Corp to float e-commerce, tech operations

NEW YORK: Deluxe Corp., the country's biggest check printer, plans to announce on Monday that it will separate its electronic commerce and technology services businesses into a new company, sources familiar with the plan said.

A minority stake in the new company, to be called eFunds Corp, will be sold to the public through an initial public offering, said the sources who declined to be identified. One source estimated the company will likely sell 10 to 15 percent to the public.

The move is expected to enable the fast-growing technology operations to a separate growth strategy from the more traditional and slower-growing check printing business.

Shares of Deluxe have been hovering near a 52-week low of 24-7/16, closing Friday at 26- on the New York Stock Exchange.

"The stock price doesn't reflect the underlying value of the assets," said one source who declined to be identified.

A spokesman for the St. Paul, Minn.-based company declined comment.

Deluxe shareholders will have the opportunity to own stock in the new company through a tax-free exchange offer. The separation will be conditioned upon receiving a favourable tax ruling from the Internal Revenue Service.

Deluxe also plans to continue its $1.48 annual dividend, the sources said.

The 85-year-old company has undergone a transformation in recent years by concentrating on technology and closing check printing plants. Although nearly 80 percent of 1998's $1.6 billion sales came from the check printing business, known as Deluxe Paper Payment Systems, the company also is now the nation's third-largest transaction processor for regional ATMS.

The company also has indicated that it expects the newer, high-growth segments to account for a far bigger chunk of future sales. Last April, Deluxe restructured into a holding company with four units that included eFunds and iDLX.

eFunds provides electronic commerce products and services such as electronic funds transfer. iDLX provides information technology and technology-related professional services to financial services companies.

"We can help merchants and financial services companies at every step of an electronic debit transaction - from fighting fraud and verifying a payer's identity when a payment is tendered, to processing the transactions, to actually moving the money," eFunds president and chief executive Debra Janssen said last October.

Upon the separation of the two companies, Deluxe Chairman and Chief Executive J.A. Blanchard will move to eFunds Corp, where he will hold those same titles, the sources said. Janssen will serve as president and chief operating officer of eFunds, which will be headquartered in Milwaukee.

Meanwhile, Deluxe Vice Chairman Lawrence Mosner is expected to take over as chairman and chief executive of Deluxe, which will remain in St. Paul.

Lehman Brothers Inc served as financial adviser to Deluxe in the transaction. The company's legal counsel were Dorsey & Whitney LLP and Skadded, Arps, Slate, Meagher & Flom LLP.-Reuters