M & F Worldwide Corp., the parent company of Clarke American, has agreed to buy the John H. Harland Co. for $1.7 billion.

If the deal is finalized, Atlanta-based Harland (NYSE: JH) will become a wholly owned subsidiary of M & F Worldwide (NYSE: MFW).

M & F also plans to combine Harland's financial services operations with that of Clarke American in San Antonio. Through this purchase, M & F executives in New York plan to enhance the levels of service each company can provide to financial institutional customers.

"Combining the resources of Harland and Clarke American will provide significant value to customers and shareholders of both companies," Harland Chairman and CEO Timothy C. Tuff says.

Clarke American supplies checks and check-related products and services to more than 3,200 financial institutions in the country.

Harland develops and markets printed products and software for banks, credit unions, thrifts, brokerage houses and financial software companies.

The company's Scantron division provides data collection, testing and assessment products to the educational, financial and commercial markets.

Under the terms of the agreement, M & F has agreed to pay $52.75 per share in cash. The boards of directors of both Harland and M & F have already approved the proposed merger.

Harland's board also has recommended that its shareholders approve the transaction.

The companies expect the merger to close in the second half of 2007, pending shareholder and regulatory approval and customary closing conditions.

M & F officials plan to finance the $1.7 billion transaction through borrowed debt. The company has already received financing commitments to complete the acquisition.

Clarke American and Harland will continue to operate in their respective hometowns of San Antonio and Atlanta. However, the combined company will have operations in more than 20 states nationwide.

If the proposed merger fails to move forward, M & F and Harland have agreed to pay termination fees under certain circumstances.

Skadden, Arps, Slate, Meagher & Flom LLP and Troutman Sanders LLP are serving as M & F Worldwide's legal advisers in this proposed merger.

Goldman, Sachs & Co. is serving as Harland's financial adviser; Cravath, Swaine & Moore LLP and King & Spalding LLP are serving as Harland's legal advisers.

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