Pulse EFT Association To Merge With Discover Financial Services
November 15, 2004
RIVERWOODS, Illinois and HOUSTON, Texas – November
15, 2004 – Discover Financial Services, a business
unit of Morgan Stanley (NYSE:MWD), and PULSE EFT
Association (PULSE) jointly announced today the
signing of a definitive merger agreement. Discover
Financial Services will acquire PULSE for an aggregate
purchase price of approximately $311 million and
other strategic value. The merger agreement, which
is subject to regulatory and PULSE member approval,
is expected to close in approximately 60 days.
“We believe the combination of the PULSE®
and Discover® networks will create
a leading electronic payments company offering
a full range of products and services that will
represent an attractive choice for financial institutions,
merchants and consumers,” said David W. Nelms,
Chairman and Chief Executive Officer of Discover
Financial Services. “Together, we intend to be
a robust competitor in the important and rapidly
growing debit market.”
“This strategic
partnership will join the forces of PULSE and
its 4,100 member banks, credit unions and savings
institutions with Discover Network and its more
than 4 million merchant and cash access locations,”
Nelms said. “The combined entity will provide
financial institutions of every size and type
with a full-service debit platform and a complete
product set, including credit, signature debit,
PIN debit, gift card, stored value card and ATM
services.”
“In a rapidly changing environment,
PULSE's Board has elected to team with a company
that has a suite of products and resources that
will enable us to continue our growth and success,”
said Stan Paur, PULSE President and Chief Executive
Officer. “We believe that PULSE's experience
in debit, combined with Discover's signature capabilities,
will create a highly appealing alternative for
small to large institutions across the country.”
Both Discover Financial Services and
PULSE believe that the merged entity will create
advantages and opportunities for financial institutions,
merchants and consumers.
·Financial institutions
will find that Discover's signature network complements
PULSE's PIN network, and that the Discover Network's
positive merchant relationships can be leveraged
to expand both networks.
· Merchants will
benefit from the combination of two networks with
a history of efficiency, low cost and strong partner
relationships.
·Consumers will benefit from
more competition and a wider range of choices
in the debit market.
“The PULSE Board,
representing a cross section of small to large
banks, credit unions and savings institutions,
believes all PULSE members will benefit in a variety
of ways from this transaction,” Paur said. “In
addition, financial institutions will continue
to have a voice through their participation in
a newly created oversight committee.”
PULSE
will become a business unit of Discover Financial
Services with both companies planning a seamless
transition. PULSE will retain its brand, pricing
and operating platform as well as its management
team, staff and Houston headquarters.
About Discover Financial Services
Discover
Financial Services, a business unit of Morgan
Stanley (NYSE:MWD), operates the Discover Card
and the Discover Network for its more than 50
million Cardmembers. The Discover Network is
the largest proprietary credit card network in
the United States with more than 4 million merchant
and cash access locations. For more information,
visit www.discovercard.com or www.discovernetwork.com.
About PULSE
PULSE is one of the nation's
fastest growing ATM/debit networks currently serving
more than 4,100 banks, credit unions and savings
institutions across the country. The network links
an estimated 90 million cardholders with more
than 250,000 ATMs and 3.3 million POS terminals
at retail locations nationwide. In recent years,
PULSE has become known as a valued resource for
consumer research related to EFT services and
an effective national voice on public policy issues
relevant to the financial services industry. For
more information, visit www.pulse-eft.com.
Howard Frazier Barker Elliott, Inc. acted
as financial advisor to PULSE in the transaction.
Morgan Stanley acted as financial advisor
to Discover Financial Services in the transaction.
Forward-Looking Statements
This release
contains forward-looking statements about Discover
Financial Services. These statements reflect management's
beliefs and expectations, and are subject to risks
and uncertainties that may cause actual results
to differ materially. These risks and uncertainties
include: whether or not the conditions to the
completion of the transaction are satisfied, the
possibility that the transaction will not close,
risks associated with business combinations, the
level and volatility of interest rates, the availability
and cost of capital, the actions of current and
potential competitors in the payments market,
the actions of actual and potential customers,
including financial institutions, merchants and
consumers, the continued employment of key personnel,
government regulation, competition and risks and
uncertainties that may affect the future results
of Discover Financial Services discussed in “Forward-Looking
Statements” immediately preceding Part I, Item
1, “Certain Factors Affecting Results of Operations”
in “Management's Discussion and Analysis of Financial
Condition and Results of Operations” in Part II,
Item 7 and “Competition” and “Regulation” in Part
I, Item 1 of Morgan Stanley's 2003 Annual Report
on Form 10-K/A and “Management's Discussion and
Analysis of Financial Conditions and Results of
Operations” in Morgan Stanley's Quarterly Reports
on Form 10-Q for fiscal 2004.
Additional
Information and Where to Find It
PULSE intends
to deliver to its members a proxy statement in
connection with the proposed transaction. PULSE
members are urged to read the proxy statement
when it becomes available because it will contain
important information about PULSE and the transaction.
PULSE members may obtain free copies of the proxy
statement and other relevant documents by writing
to PULSE, 1301 McKinney, Suite 2500, Houston,
Texas 77010, ATTENTION: Proxy Statements.
PULSE and its directors, officers, certain
other members of management and employees may
be deemed to be participants in soliciting proxies
from PULSE's members in favor of the proposed
acquisition. Information regarding the persons
who may be considered to be participants in the
solicitation of proxies from PULSE's voting members
in connection with the proposed transaction, as
well as any interests that any of these persons
may have in the proposed transaction, will be
set forth in PULSE's proxy statement when it becomes
available.