Deluxe will spend $960 million to purchase Texas-based First American Payment System, allowing the Shoreview company to expand further into merchant services.

Deluxe is in the middle of a transformation from a company that makes checks to small-business services firm. The acquisition announced Thursday would be the largest in the company's 106-year history.

"This is a major, logical and responsible next step in our transformation," said Barry McCarthy, Deluxe's chief executive.

"With electronic payments playing an increasingly important role across the economy, the addition of First American's independent, leading payments platform will advance our One Deluxe [transformation] strategy and our overall growth trajectory."

Already, Deluxe's existing software and services process more than $2.8 trillion annually. First American's technology will allow the company to double the payments segment annual revenue to $600 million while maintaining healthy profit margins, officials said.

The transaction, which is expected to close by the end of the second quarter, will be financed with a combination of secured and unsecured debt.

Deluxe Corp Shoreview, Minnesota headquarters. (GLEN STUBBE/Star Tribune)

Deluxe also said it expects its first-quarter adjusted income to be up 7 to 9 % over the same period a year ago. Full results will be released May 6.

First American is privately owned and based in Fort Worth.

The 30-year-old company's workforce, as well as its leadership team, will become Deluxe employees. However, Deluxe does see some opportunities to sync the two companies' operations.

First American CEO Neil Randel, who will become Deluxe's managing director of merchant services, said becoming part of a Fortune 1000 company gives customers more opportunities.

"I look forward to working closely with [Deluxe's] team to exponentially grow our combined company and deliver enhanced value to all of our stakeholders," he said.

Catherine Roberts • 612-673-4292