Magazine article American Banker

Ex-Star Systems Banks to Sell off Concord Stock

Magazine article American Banker

Ex-Star Systems Banks to Sell off Concord Stock

Article excerpt

Most of the banks that accepted big stakes in Concord EFS Inc. in return for the sale of their stakes in the Star Systems Inc. electronic funds transfer network have decided to cash out.

Concord EFS, the largest electronic funds transfer network in the United States and the only publicly held one, filed a registration statement on Thursday with the U.S. Securities and Exchange Commission for the proposed public offering of up to 24 million shares of common stock. Of that amount, 19.2 million shares are being sold on behalf of the former owners of Star Systems, which Concord acquired on Feb. 1.

The remaining shares include two million to be sold by the Memphis, Tenn.-based Concord plus an additional 3.17 million shares to cover over-allotment options granted to the underwriters. The offering will be managed by Salomon Smith Barney; Goldman, Sachs & Co.; William Blair & Co.; Banc of America Securities LLC; Bear Stearns & Co.; Merrill Lynch & Co.; and Morgan Keegan and Co.

One Star owner, Zions Bancorp of Salt Lake City, which had held an 8% stake in Star Systems and maintains other fairly considerable technology investments, will not participate in the offering, according to a spokesman at the bank, who declined further comment.

Timothy W. Willi, who is a financial technology analyst for A.G. Edwards & Sons, said that Zions could have been motivated to hold on by any number of factors. "They might not want to pay the underwriting discount," and instead prefer to sell their shares privately. Or some might want to hold their shares "because it's a good investment."

For other banks that were major Star investors, the offering means the opportunity to cash out on their gains -- although first-quarter earnings at the companies already included accounting for the profits on their investments. …

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