Canadian Imperial Bank of Commerce is to sell its merchant card services business to National Data Corp in exchange for a 26.25% equity stake in Global Payments, an e-commerce spin off from NDC.
Terms of the agreement are subject to a favourable IRS tax ruling for the Global Payments spin-off.
Global Payments is a US payment processing and merchant acquiring company. It expects the marketing alliance with CIBC, one of Canada's largest Visa and online debit acquirers, to significantly broaden its presence in North America. CIBC Merchant Card Services processes over 800 million transactions per year for over 140,000 merchant locations throughout Canada with referrals from CIBC's 1,200 branch locations.
For the fiscal year ended October 31, 1999, CIBC Merchant Card Services had net revenue of US$86.6 million and net income of US$13.0 million.
"The alliance provides CIBC an excellent means to expand its merchant services activities," says David Marshall, CIBC vice-chairman of electronic commerce, operations and technology. "The arrangement is consistent with CIBC's broader initiatives in electronic commerce and expansion into the US marketplace."