American Express will acquire GE Money's corporate card unit, which serves more than 300 large corporate clients, in a $1.1 billion deal expected to be completed in the next few days, the companies announced today.
Company officials said the sale of Salt Lake City-based GE Corporate Payment Services, subject to closing conditions and regulatory approvals, will be complete by the end of March. GE clients, who currently use the MasterCard and Visa networks, will be converted to the American Express platform during the next several months, although existing corporate agreements will be honored, according to an American Express spokesperson.
American Express reported that the agreement is part of its strategy to grow its payment sector, while Mark Begor, president and CEO of GE Money in the Americas, said the deal is part of GE's strategy to redeploy assets in financial services.
General Electric created the payment services unit in 1992 to issue travel and entertainment and purchasing cards to GE employees. It expanded to serve other clients, and
Business Travel News'2007 Business Travel Survey reported a 2006 T&E account charge volume of $3.3 billion for its large-market clients. GE remains its largest single client and already has signed a multiyear agreement with American Express for card services.
Total global purchase volume for GE Corporate Payment Services in 2007 was more than $14 billion in 2007, according to the company. Over the past five years, its billed business has grown at a compounded rate of 18 percent.
"Acquiring Corporate Payment services adds to our purchasing card capabilities and gives us the opportunity to accelerate our growth," Anré Williams, president of American Express' global commercial card and services, said in a statement. "In addition, Corporate Payment Services also has excellent credit metrics and a premium client base."
With the sale, American Express also acquires GE's VPayment technology, which provides unique account numbers for large-ticket purchases that expire once the purchase is authorized. This gives users fraud controls over such transactions.