American Express buys GE Money corporate payment services unit

American Express buys GE Money corporate payment services unit

American Express has signed an agreement to acquire Corporate Payment Services (CPS), the commercial card and corporate purchasing division of General Electric subsidiary GE Money, in a deal worth around $1.1 billion in cash.

CPS was created in 1992 to issue GE's corporate travel and entertainment cards and purchasing cards to employees. It has since expanded to serve more than 300 large corporate clients. CPS now has around 350 employees largely based in Salt Lake City.

The unit generated over $14 billion in 2007 global purchase volume and maintained $1.1 billion in receivables at year end 2007, says American Express. Its billed business has grown at a compounded rate of 18% over the last five years.

The sale also includes the purchase of GE's patented vPayment technology, which provides fast and efficient payment for large ticket purchases. The platform provides single-use account numbers for each transaction that expire once the purchase has been authorised.

Under today's deal, GE has also signed a multi-year agreement to continue to use the CPS services and will continue to be the unit's largest single client.

American Express says the acquisition is part of its ongoing strategy to focus on the payments sector and follows the sale last month of its international banking subsidiary.

"Expanding our corporate purchasing and expense management services is a top priority for American Express. Acquiring Corporate Payment Services adds to our purchasing card capabilities and gives us the opportunity to accelerate our growth. In addition, Corporate Payment Services also has excellent credit metrics and a premium client base," adds Anré Williams, president of American Express' global commercial card and services division.

American Express says the acquisition will be additive to revenue growth but is expected to have a dilutive impact on earnings and return on equity in the early years following the transaction.

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