Telekurs Sells No. American Division In Mgmt. Buyout

In an attempt to divest itself of a unit it no longer considered part of its core business, Zurich-based Telekurs A.G. has sold its Telekurs (North America) division to Zilkha & Co. -- a New York-based private investment firm that joined forces with a Telekurs (N.A.) management team to execute the buyout. The agreement, which was in large part strung together by Telekurs (N.A.) president Ken Marlin, is expected to be finalized by the end of this month. Among other things, the deal will give birth to a pair of new companies: Telesphere Corp. and Telekurs (USA) Inc.

Telesphere Corp., which will be based in New York and headed up by Marlin, will inherit nearly all of Telekurs (N.A.)'s infrastructure, customers and products -- including its Ticker datafeed service. "What we have purchased is all of Telekurs (North America)'s sales organization, marketing, customer support, technical infrastructure, etcetera," says Marlin, who will take over as president and chief executive officer of Telesphere when the deal is finalized.

The new company will also inherit approximately two-thirds of Telekurs (N.A.)'s 150-strong employees and most of its management team -- a group that includes six vice presidents: Troy Adcox, v.p. of sales; Jerry Bartlein, v.p. of operations; Ron Cruz, v.p. of market data engineering; Maryann Houglet, v.p. of corporate development; Donna O'Connor, v.p. of marketing; and Tony Weber, v.p. of systems development. The vice presidents, along with Marlin, will have an equity stake in Telesphere.

But the exact percentage of the company that group will own remains cloudy at press time. Marlin describes the Telesphere management team as "co-owners" of the company with Zilkha. However, he adds that "under certain circumstances, they have more rights than we do."

John Torell, a partner at Zilkha and the future chairman of the board for Telesphere, gives a more definitive answer. Torell says that while the management team will have a "major stake" in Telesphere, Zilkha will be the majority owner of the company.

Meanwhile, Telekurs (USA), which will be based in Stamford, Conn. and run by former Telekurs (N.A.) chief financial officer Barry Raskin, will represent the remnants of the defunct Telekurs (N.A.) group. Raskin, who will take over as president of Telekurs (USA) once the transition is complete, says the firm will serve as the data collection agent for Telekurs A.G. in Europe.

"We're going to still be the company to collect all of the Western hemisphere data for Telekurs," Raskin says. "We still have our data collection facility here -- which collects U.S., Canada, Mexico and all of South American data for [Telekurs A.G.'s] global database back in Switzerland."

As part of the deal, Telesphere has signed a long-term, non-exclusive agreement to redistribute Telekurs' international securities data in the U.S. and Canada. Says Raskin: "Telesphere is going to continue to be a vendor of Telekurs for our international real-time data, our international closing price data and our international corporate actions data." The deal will make Telesphere the largest redistributor of Telekurs data in the United States, Raskin says.

Telekurs, for its part, will serve as Telesphere's data distribution agent in Asia -- specifically, in Tokyo and Singapore. Marlin, who says that the redistribution agreement with Telekurs will last through 1996, asserts that all the products sold by Telekurs' Tokyo and Singapore offices will be Telesphere products.

According to Raskin, Telekurs decided to sell off its North American arm because it wanted to concentrate on what it felt was its core strength: back-office data. "Our core strengths are really in the back-office.... We're not really set up to be a trading firm," Raskin says. "[So] we were going to do one of two things with Ticker: either drop it or try to migrate people to a new version of a trading feed.... and we decided that [developing and marketing a new feed] just didn't make sense."

What's more, Raskin says, Telekurs eventually concluded that it was illogical to maintain two ticker plants -- one in the U.S. and one in Zurich. "We were maintaining two different sets of operations staff and development staffs," he says. "[And] there was no real good sharing of technology."

Due to the different technologies the firm used to run its respective ticker plants, Raskin says, Telekurs had to maintain dual sets of infrastructures and dual sets of exchange lines, which all eventually became very expensive. In the end, Raskin says, Telekurs "never really achieved the synergy we needed to achieve" with its North American unit.

But Marlin says that Telekurs A.G. was better off selling the operation anyway. According to Marlin, Telekurs had decided to narrow its focus to Europe in the spring of 1994. After he learned of Telekurs' intentions, Marlin says he met with his vice presidents to determine the best course of action.

"We came to the conclusion that we could offer Telekurs a way to achieve its strategic goals and for Telekurs to make more money. And that was by us buying out the company and having a long term data agreement with Telekurs," says Marlin. "In addition to the purchase price for the company, Telekurs is going to sell a lot more Telekurs data via us than they would be likely to sell if we were merely their arm."

By selling the company to a Telekurs (N.A.) management team, Marlin says, Telekurs put the firm in a "much better position to tailor products to meet the needs" of its client base.