EDB has entered into an agreement to buy the Swedish card processing company CEKAB.
EDB has entered into an agreement to buy the Swedish card processing company CEKAB. This agreement makes EDB the leading player for capturing and managing card transactions in the Nordic market. EDB is to pay SEK 257 million for the business acquired. The company is expected to have in the order of SEK 20 million in cash at the time of acquisition.
"This acquisition puts EDB in the driver's seat for the future of card processing in the Nordic countries. CEKAB is an exciting company and opens up entirely new opportunities for EDB in both the Swedish and Nordic banking and finance markets", comments Endre Rangnes CEO of EDB.
Card processing involves the capture and management of transactions carried out by card users through devices such as minibanks and payment terminals. Transactions are processed on behalf of the banks that issue the debit and credit cards used to initiate the transactions. Billions of such transactions are carried out in the Nordic countries each year, and transaction numbers are expected to increase in future years.
Market leader in Sweden
CEKAB is one of the leading public companies for processing card transactions from minibanks (ATMs) and payment terminals. The company has a strong position in the Swedish market, and in 2006 it processed over 1 billion transactions from a large number of ATMs and payment terminals. CEKAB has 52 employees and operates from Stockholm. The company reported turnover of SEK 134 million for 2006. CEKAB provides its services to many of the largest Nordic banks, including Nordea, Svenska Handelsbanken, SEB, Swedbank and Danske Bank. The company was established in 1989 by a number of banks to facilitate collaboration on the use of Bankomat minibanks in Sweden, and is still owned by banks that purchase services from the company.
Internationalisation of the card market
The card market in both the Nordic countries and Europe as a whole is driven by strong forces for internationalisation, with new EU rules promoting greater cross-border competition and the banks seeking solutions that simplify international card transactions. At the same time, card use throughout Europe is on a rising trend.
"EDB is seeking to expand its position, and sees major opportunities in the field of card transaction processing. CEKAB will be an important element in working towards realising our ambitions for EDB in the card area. In addition, the acquisition will create a broader platform and new opportunities for sales of EDB's other Bank & Finance solutions to the Nordic market", adds Endre Rangnes.
The acquisition of CEKAB will make EDB the leading company for capture and processing of card transactions in the Nordic countries, with cross-border delivery of services to banking customers. EDB already has sizeable operations for processing minibank and credit card transactions in Norway. These operations, together with CEKAB, will form the basis for EDB's focus on the card processing area. EDB believes that bringing the two operations together offers economies of scale and synergies that will pave the way for further growth and new opportunities in this and other areas. EDB's business model involves delivering services to banks that issue cards and provide merchant services so that they can offer their Nordic and international customers (card holders and merchants) new and more efficient services. EDB attaches considerable importance to offering a range of services to banks that meet their needs for expansion into new markets outside the Nordic countries.
More about the transaction
EDB is to buy 100% of the share capital of Centralen för Elektroniska Korttransaktioner AB, CEKAB, from the current owners Nordea (39%), Handelsbanken (37%), Swedbank (21%) and Danske Bank (3%). EDB will pay SEK 257 million for the shares in total. The company is expected to have in the order of SEK 20 million in cash at the time of acquisition. CEKAB will continue as a wholly-owned subsidiary of EDB Business Partner AB. The business will continue to be run by Eva Menzing, the current Managing Director of CEKAB. The acquisition is expected to take place during March 2007. The transaction is conditional on the necessary approvals being granted by the relevant authorities.