Synovus announces it will spin off its TSYS

Move will help both companies to grow faster

Synovus Financial Corp., parent of First Commercial Bank in Huntsville, said Thursday that it will spin off its $4.7 billion majority stake in Total System Services Inc., a credit and debit card processor better known as TSYS.

Reuters reported that the spinoff is expected to take place Dec. 31, pending regulatory approval, and make TSYS independent. TSYS' market value is about $5.8 billion, while Synovus' is $8.5 billion. Synovus has an 80.8 percent stake in TSYS. Both companies are based in Columbus, Ga.

Synovus said the spinoff would help the separate companies grow faster and allow management to focus on their core businesses. The company created TSYS in 1983, and TSYS shares have traded publicly since 1989.

"This (spinoff) will have virtually no impact on our banking operations," said Charlie Kettle, president of First Commercial, except that now "our senior management will be able to focus on our core business, which is banking.

"It frees up the holding company to look at strategic acquisitions in-market and in new markets that are consistent with the way we do business."

TSYS had constraints on issuing shares and incurring debt as a result of existing in a bank holding company structure.

An independent TSYS will have "the ability to issue stock to bring in additional capital and acquire additional operations," Kettle said.

Jeff Davis, an analyst at FTN Midwest Research in Nashville, said the spinoff "will make it easier for shareholders to Synovus' business, because it will no longer be a hybrid bank and processor."