Nova to Acquire Rival PMT for $1.3 Billion

Nova Corp., which approves credit card transactions and applications, agreed Thursday to buy rival PMT Services Inc. for $1.3 billion in stock to better compete in a business where the largest companies make the most money.

Atlanta-based Nova will give 0.715 share, or $25.16, for each share of Nashville-based PMT, a 22% premium over Thursday’s closing price. The combined company, the fourth-largest servicer of credit cards, will manage 350,000 accounts that charge about $40 billion a year, the companies said.

Processors of credit cards lagged financial services companies as competition drove down profit margins for the entire business. Still, analysts expected that earnings of both Nova and PMT would have increased sharply next year, mostly through acquisitions, said Charles Scavone, senior portfolio manager at AIM Advisors Inc. Scavone manages two funds that owned 407,000 shares of Nova and 2.125 million PMT shares as of March 31.

Edward Grcedzinski, Nova’s chairman, president and chief executive, said the combined companies complement each other and will continue to grow together.

The transaction “broadens our distribution in a dramatic way,” Grcedzinski told the Bloomberg Forum. PMT gets clients through its sales force, and Nova will offer its services through banks.

Following the announcement, Nova’s shares fell $1.25 to close at $33.94 on the New York Stock Exchange. PMT Services rose $2.31 to close at $22.94 on Nasdaq.