| Keycorp acquires Canadian company for $3m |
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| by Stan Beer | |
| Wednesday, 04 October 2006 | |
      
OSG is currently the largest service provider to the payments and point of sale industry in Canada, and provides services to leading payment processors and major retailers in that market. The business is similar in nature to Keycorp’s EFTPOS Engineering (Customer Service) business in Australia, however has the additional capability of providing enterprise wide point of sale systems support for major retailers. The primary intent in acquiring OSG is to provide the infrastructure platform to launch managed payment services in the Canadian market; services that Keycorp’s leading customers are now requesting it provides. Keycorp has been in Canada since the early 1990s following the acquisition of Tillsmith Systems and now enjoys a significant and well established market presence. With this acquisition Keycorp will be the only company in Canada that can provide end-to-end payment solution services. The acquisition is consistent with Keycorp’s strategy of migrating its market positioning from a product-based company to a services and solutions-based company. Keycorp has gained traction with its managed payment solutions model in Australia and now intends to replicate that model in Canada. The total business in Canada, after the acquisition of OSG, will generate around A$35 million in revenue for the current financial year and approximately A$50 million in financial year 2008. Due to the restructuring required, the Canadian business is expected to be EPS neutral in the first year and EPS accretive thereafter. “The market is hotting up in Canada on the eve of the move to the EMV (Europay MasterCard VISA) standard and the combination of Keycorp’s existing product offerings with OSG’s services, means we are well placed to offer managed payment services to major customers in the Canadian market as they move to ensure all their terminals and cards are EMV compliant,” said Bruce Thompson, CEO, Keycorp. Keycorp’s customer service business in Australia is its most profitable business. The head of this business, Joe Bonin, will relocate to Canada to manage the Optimal Services Group. He will be assisted by the current CFO, Brad Johnson, who will also relocate to become the CFO of the Canadian operation. Bonin will introduce customer service and management systems that have ensured success for the Australian operations. “We are confident that with new methodologies and processes in place we can turn Optimal Services Group into another profitable business for Keycorp, adding significant value for shareholders,” said Bonin. Keycorp is in discussions with Canadian banks and processors regarding potential business opportunities now that it has more significant scale and a payment services infrastructure. |
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