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Telstra-Keycorp deal moves ahead

By Phil Boeyen, ShareChat Business News Editor

Thursday 26th October 2000

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Telstra has finalised an alliance that will see it take a majority stake in Australian e-commerce and smartcard company, Keycorp.

The two companies have signed all agreements necessary to complete their alliance announced in July, following the completion of due diligence and regulatory approval.

Under the deal Telstra will subscribe for 38.7 million fully paid ordinary shares representing 51% of Keycorp in return for its Eftpos business, which will be merged into Keycorp.

However following due diligence the price of the deal has been re-rated downwards to A$11 a share instead of the original A$13.30 per share, with Telstra's Eftpos business having a revised value of A$426 million rather than the original A$515 million.

The companies say the re-pricing is consistent with the recent valuation re-ratings of telecommunications and technology companies and assets globally.

Telstra and Keycorp say together they plan to build a "global full service end-to-end internet payments service provision business".

Keycorp has also announced it plans to buy out its joint venture partner in payments technology company Electronic Financial Technologies.

Keycorp will pay the Commonwealth Bank of Australia A$3.6 million and the issue of around 220,000 shares at A$11.00 each. It will also acquire a CBA subsidiary involved in an associated research and development venture with Keycorp.

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