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July 6, 2011updated 04 Apr 2017 4:15pm

Western Union to acquire TGBP

Western Union will acquire Travelex Global Business Payments (TGBP) an international business payments specialist provider, in a cash deal worth £606m ($970m).The remittance specialist plans to accelerate growth for the combined business by driving further geographic expansion, gaining access to new customers and segments, introducing the TGBP third party distribution capabilities to Western Unions financial institution relationships, and leveraging the Western Union agent network for distribution in certain markets.

By Louise Naughton

Western Union will acquire Travelex Global Business Payments (TGBP) – an international business payments specialist provider, in a cash deal worth £606m ($970m).

The remittance specialist plans to accelerate growth for the combined business by driving further geographic expansion, gaining access to new customers and segments, introducing the TGBP third party distribution capabilities to Western Union’s financial institution relationships, and leveraging the Western Union agent network for distribution in certain markets.

TGBP conducts business payments annually for 35,000 customers in 14 countries. Projected 2011 revenues for TGBP are approximately £150m, with a normalised EBITDA margin of approximately 30%.

“The acquisition of Custom House in 2009 gave us an entry into the business-to-business cross-border payments market, and Travelex Global Business Payments provides us immediate scale, further reach, and added capabilities,” said Hikmet Ersek, president and CEO of Western Union.

“The combination of TGBP and Western Union Business Solutions gives us a strong foundation in a growing and largely underserved market, and provides us the opportunity to drive additional growth for years to come.”

Western Union expects the combined TGBP / Western Union Business Solutions revenue to grow at an approximately 10% CAGR over the next three year. Accelerated longer-term growth and margin expansion opportunities are anticipated once integration activities have been completed.

The TGBP acquisition is predicted to be dilutive to Western Union’s GAAP EPS by approximately $0.02 in 2011 and approximately $0.04 in 2012 due to deal and integration costs and non-cash amortisation expense. The acquisition is expected to be accretive to 2013 GAAP EPS by approximately $0.04.

The transaction is subject to regulatory approvals and satisfaction of closing conditions, and is expected to close in late 2011.

 

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