CyberSource Corp. has signed a letter of intent to purchase
CardSystems, a California corporation that specializes in processing
online transactions. CardSystems was the target of the largest
consumer information breach in history. First acknowledged
in June, the breach exposed 40 million consumers to potential
fraud. The security breach took place in CardSystem's Tucson
branch. MasterCard International informed the public of this
problem in June. The terms of the CyberSource/CardSystems deal
were not disclosed but the purchase should be made final in the fourth
quarter. There is a period of exclusivity period in which
CardSystems cannot engage in talks with other potential buyers,
although either side is free to walk away from the deal.
After the security breach was made public, American Express and Visa
made immediate plans to cease doing business with CardSystems.
CyberSource is currently attempting to create a working relationship
with American Express and Visa. The continued business of these
two major credit card companies will be the determining factor in
making the decision to go ahead with the purchase of CardSystems.
If the purchase is completed, the CardSystems name will be removed, but
many of the CardSystems employees will be offered positions with
CyberSource.
