Synovus Financial Corp. made it official today, saying it is spinning off the credit-card processing subsidiary TSYS into a stand-alone company that has big plans for international growth.
"Today is a historic day for our company," Richard Anthony, chairman and CEO of Synovus, said in a letter to shareholders on the company's Web site, www.synovus.com. The letter was posted at 4:08 p.m., just after the New York Stock Exchange's closing.
"You may have heard the announcement that the Synovus Board of Directors has determined that it is in the best interest of our shareholders to spin off TSYS, which is expected to occur on December 31, 2007," he said.
The decision came after years of informal discussion by management and weeks of formal study by a special committee that eventually determined separating the two firms was best for both. It will require approval by federal regulators.
The split essentially gives TSYS sole control of its future, allowing the world's largest card processor to start making acquisitions and other strategic moves in its quest to expand aggressively around the globe, particularly in fast-growing markets in Europe, Latin America and the Asia-Pacific area.
"This is a watershed event for both TSYS and Synovus that we believe will benefit the shareholders of both companies," Philip W. Tomlinson, chairman and chief executive officer of TSYS, said in a statement released Thursday by his company.
Said Tomlinson: "This transaction allows for broader diversification of our shareholder base; more liquidity in our shares; additional investment in strategic growth opportunities and potential acquisitions; and the opportunity for shareholders to value TSYS as a stand-alone, pure play in the payments processing market."
Columbus-based Synovus, which owns 81 percent of TSYS stock, has been its parent since the data processor's humble launch as a simple credit-card operation with Columbus Bank & Trust Co. in 1966. The processing department became its own publicly traded subsidiary in 1983 under the name Total System Services Inc.
It still has been owned by Synovus since, however, with potential tax liabilities preventing that ownership from dropping below 81 percent. That won't be the case now, once the spinoff is approved. TSYS should be able to use its increasing cash flow and sales of stock to finance future growth, stock market analysts have said.
Looking overseas is a natural move for TSYS, with the credit-card processing market in the United States maturing, primarily because of bank consolidations that have allowed those credit-card issuers to move processing in-house.
Total System Services began using the TSYS brand in 2001.
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