NA Bankcard, WorldPay On The Block

NEW YORK(Reuters) – Privately held North American Bancard Inc has hired Deutsche Bank (DBKGn.DE) to advise it on a possible sale, sources familiar with the matter said, in a sign payment processor deals are picking up after a two-year lull.Royal Bank of Scotland Group Plc’s (RBS.L) is also moving ahead on a plan to sell WorldPay, its payment processing business and is attracting significant interest from potential bidders.

These deals support analysts’ expectations of more consolidation activity in the payment processing sector, as banks continue to be distracted with their problems and face the need for further capital, and independent processors get more comfortable with their position as the crisis abates.

Payment processing companies provide services such as transaction processing, banking and payments technologies, software services, card issuing and outsourcing services.

Multiples and valuations are a lot lower right now, John Kraft, an analyst with DA Davidson & Co, said.

“People have been very hesitant because they really want to keep their cash,” Kraft said. “Once these companies get more comfortable with their own survival and use of cash, then yes, this is a great time to be picking up assets strategically.”

NAB DEAL

Troy, Michigan-based North American Bancard had roughly $40 million in earnings before interest, taxes, depreciation and amortization (EBITDA), one of the sources said.

That could value the company in the $500 million range, based on an EBITDA multiple of 10 times to 15 times, according to Davidson’s Kraft.

North American Bancard was founded in 1992 by Chief Executive Marc Gardner and has more than 225 full-time employees at its corporate office.

The company offers products including: credit, debit, check conversion, and gift and loyalty card solutions.

Gardner and Deutsche Bank declined to comment. The sources who spoke to Reuters declined to be named because the sales process is not public.

QUIET AFTER SURGE

The sector saw a surge of deals in 2007, when companies such as Fidelity National Information Services Inc (FIS.N), Fiserv Inc (FISV.O) and others made multiple acquisitions.

A driver behind those deals was the belief that banks preferred dealing with fewer vendors.

“They want to go to one vendor and have a best-of-suite rather than a bunch of vendors for best-of-breed,” Kraft said.

But the last two years have been relatively quiet on the M&A front, as companies worried about their survival amid the financial crisis. Only a few deals have been struck, such as Fidelity National’s $2.94 billion acquisition of Metavante Technologies Inc.

Deal activity has also included banks selling assets, a trend that continues with businesses like WorldPay coming to market.

Last year, Bank of America Corp (BAC.N) sold its PayMode product, operations and vendor network to Bottomline Technologies (EPAY.O) and Fifth Third Bancorp (FITB.O) sold a majority interest in its payment-processing unit to private-equity firm Advent International Corp.

(Reporting by Paritosh Bansal and Megan Davies, editing by Leslie Gevirtz)