First Data to Spin Off Western Union

First Data Corp. today announced that its Board of Directors, following a review of the Company’s businesses and structure, has decided to separate its fast-growing Western Union consumer payments business into an independent publicly traded company through a tax-free spin-off of 100% of Western Union to First Data shareholders.

The transaction will create two well-positioned public companies with global franchises: a high-growth company focused on serving consumers and a steady-growth company with great cash flow focused on serving merchants and financial institutions. First Data believes that its shareholders, customers and employees will all benefit from the focus of each company on its own strategic initiatives, growth plans and capital usage. First Data expects to complete the separation in the second half of 2006, and will update shareholders on the structure and timing of the transaction when first quarter results are announced in April.

First Data also announced that it will retain its domestic Card Issuing business, and will organize and report its businesses after the spin-off in three primary segments: First Data Financial Institution Services (including the Card Issuing business), First Data Commercial Services and First Data International. This alignment enables an increased focus on each customer group and better targeted sales and marketing programs.

Ric Duques, Chairman and Chief Executive Officer, said: “Since I returned to First Data two months ago, I have spent considerable time evaluating our businesses and working with the Board on a strategic plan to reinvigorate growth, reduce our cost structure and simplify our organization with a sharpened focus on our core competencies and our three customer groups — consumers, merchants and financial institutions. I am confident that this strategy, coupled with the simpler structure, recent management changes in our Merchant and Card businesses, and a renewed commitment to meeting the needs of our financial institution and merchant customers, will benefit our shareholders and lead First Data into a new phase of growth and expansion.”

The independent Western Union company, which will include Western Union, Orlandi Valuta and the recently acquired Vigo business, will be the largest money transfer company, offering customers the ability to transfer money or make payments virtually anywhere in the world. Western Union handles more than 275 million money transfers each year through its more than 271,000 agent locations in over 200 countries and territories. The business will be led by Christina Gold, who will become chief executive officer of Western Union.

Duques said: “We have concluded that our shareholders will derive long-term benefit from keeping the U.S. Card Issuing business as part of First Data and taking concerted actions to improve this business. We will capitalize on the significant growth opportunities in each of our three new segments. First Data has successfully expanded globally by leveraging the credibility we have gained and the relationships we have established over many years with major U.S. customers. Building on this foundation, our laser-like focus on all three segments will make First Data an even more formidable player in the worldwide payments industry.”

Overview of New Segments
First Data’s businesses will be reported in 2006 in the following primary segments. Accompanying this release are schedules with the preliminary reclassifications in the new segment format by quarter for 2005 and 2004. Final adjusted schedules will be provided with the first quarter earnings release.

• First Data Financial Institution Services, which had revenue and operating profit of approximately $1.9 billion and $378 million respectively for 2005, presented in the new segment format. This business, which includes the Card Issuing, Debit, REMITCO and Output Services units, will be led by David Bailis, who is currently president of First Data’s Card Issuing Services business.
• First Data Commercial Services, which had revenue and operating profit of approximately $3.8 billion and $893 million respectively for 2005, presented in the new segment format. This business, which includes the Merchant Domestic, Merchant Debit, TeleCheck and Prepaid units, will be led by Ed Labry, who is currently president of First Data Merchant Services.
• First Data International, which had revenue and operating profit of $915 million and $113 million respectively for 2005, presented in the new segment format. This business, which includes all current First Data International businesses, will continue to be led by Pam Patsley, who is currently president of First Data International.
• Western Union, which had revenue and operating profit of approximately $4.0 billion and $1.3 billion respectively for 2005, presented in the new segment format. This business, which includes Western Union, Orlandi Valuta and the recently acquired Vigo business, will continue to be led by Christina Gold.