American Express Buys GE Money's corporate-payment services

This is of interest to folks in Phoenix & Salt Lake City where American Express has many employees ... Acquiring GE as a Corporate Card customer is a big plus in this deal.

UPDATE: American Express To Buy GE Money Unit For $1.1 Billion:
"American Express Co. (AXP) agreed to purchase General Electric Co.'s (GE) GE Money's corporate-payment services, which provides commercial payment and purchasing cards to corporations, for $1.1 billion.
. . .
GE created corporate-payment services in 1992 to issue corporate travel and entertainment cards and purchasing cards to employees. The unit, which now caters to more than 300 large corporate clients, generated more than $14 billion in 2007 global purchase volume and maintained $1.1 billion in receivables at Dec. 31, the companies said. Its billed business has grown at a compounded rate of 18% over the last five years. It employs about 350 people, largely in Salt Lake City.

The transaction calls for GE, the unit's largest client, to become a client of American Express under a multiyear pact, the companies said.

For American Express, the deal is part of an ongoing strategy to focus on the payments sector and follows the sale last month of its international banking subsidiary. Corporate-payment products are similar to those offered by American Express' commercial card business, which handles the travel, entertainment and purchasing spending by employees of large corporations and mid-sized companies. Accounts typically are paid in full at the end of each month, rather than through a revolving credit account.

The sale also includes the purchase of GE's vPayment technology, which permits the processing of large payments with fraud controls.

Mark Begor, president and chief executive of GE Money's operations in the Americas, said the unit "has been a terrific GE growth story, and today's announcement underscores the value we've created from a business that essentially had a single client only about a decade ago. This transaction meets GE's strategy of redeploying assets in financial services and is a win for GE, our shareowners, and our customers."

American Express expects the acquisition to slightly cut per-share earnings and return on equity in the early years following the transaction."

American Express buying GE Money unit - Forbes.com:
"The acquisition is part of American Express' strategy to grow its payments business. The unit being acquired is similar to American Express' commercial card business, which handles work expenses by employees of mid- and large-sized companies.

American Express said the deal will add to revenue immediately, but reduce earnings slightly in the first few years after the deal is completed. The expectation for a small decline in earnings is based on an expectation the cash used to buy the unit would have otherwise been used to repurchase common stock.

The deal is expected to close by the end of the month."

GE reaches a pair of deals with American Express, Santander - MarketWatch:
"'American Express is hoping to increase its value proposition to corporate clients by complementing its market-leading corporate card program with a robust purchasing card program -- all for a 'one-stop shop' approach,' said Red Gillen, senior analyst with Celent, a Boston-based financial research and consulting firm.

GE, which has signed a multiyear contact with American Express, said the deal will allow it to put assets in financial services to different use.

'GE Money has traditionally been more focused on the consumer space and, given the current economic crisis, a capital infusion from selling a business unit of secondary importance comes at an opportune time,' Gillen said."

Emphasis added.