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Jack Henry will acquire Peerless for $36 million

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Jack Henry & Associates announced in August a definitive agreement to acquire Peerless Group Inc. for about $36 million, or $7.25 per Peerless Group share. At the time of the announcement, Peerless Group stock closed trading at $4.875 per share.

A release from the companies said the deal is expected to close in the fourth quarter of 1998 and is expected to add immediately to Jack Henry's earnings per share.

"We are very pleased to add Peerless Group to our corporate family," said Michael E. Henry, chairman and CEO of Jack Henry & Associates. "The Peerless Group franchise, including its customer base, image- and item-processing capabilities and service bureau operations, enhances our own ability to service the financial service industry.

"Peerless Group's penetration of the credit union market, in particular, will provide an exciting new opportunity for us to expand our business."

Jack Henry reported revenues of $113 million and earnings of $22 million for its fiscal year ended June 30. Peerless Group had profits of $1.9 million on revenues of $30.1 million in 1997.

Under terms of the agreement, Peerless Group shareholders will receive 0.16145 shares of Monett-based Jack Henry's common stock, based on the average per- share trading price of Jack Henry shares over a specified period prior to the announcement.

The exchange ratio is subject to adjustment in the event the average per-share trading price of Jack Henry shares changes by 15 percent or more before the deal closes.

In addition, Richardson, Texas-based Peerless Group has granted Jack Henry an option, which may be exercised under certain circumstances, to purchase authorized but unissued shares of its common stock equal to 19.9 percent of Peerless Group shares currently outstanding.

The acquisition, structured as a tax-free stock exchange for Peerless shareholders, will be accounted for as a pooling of interests for Jack Henry. Both companies' boards have approved the deal, which requires regulatory and Peerless shareholder approval as well.

Michael E. Henry said Peerless will operate as an independent subsidiary and will continue to support its products and technology.

"With the ongoing consolidation in the financial services industry, we believe becoming part of one of the nation's top-performing financial services companies will be in the long-term best interests of our associates, customers, shareholders, business partners and communities," said Rod Armstrong, Peerless Group's chairman and CEO.

Peerless Group designs, develops, installs and supports integrated information systems for community banks and credit unions. The company was formed in 1989 through a management buyout of EDS' turnkey bank system division.

Also in August Jack Henry announced a quarterly cash dividend of 6.5 cents per share of common stock. As of Aug. 11, the company had 18.96 million shares of common stock outstanding.

Peerless Group Inc. closed trading Sept. 9 at $5.625. Jack Henry & Associates closed trading on the same day at $44.75. Both companies are traded on the NASDAQ Exchange under the symbols PLSS and JKHY, respectively.

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