American Express Company signed a marketing partnership with and made a "strategic investment" in Concur Technologies. The deal means Amex's corporate card sales force will no longer market the IBM expense solution; instead it will "exclusively" promote Concur Expense to clients by referring sales leads to Concur. In turn, Concur will "exclusively" market Amex's card products to its clients.
At the same time, American Express bought 6.4 million shares of newly issued common Concur stock, representing 13 percent of the company's outstanding common equity voting interest. At $39.27 per share, or $251 million in cash, the purchase price was 17 percent higher than Concur's average stock price for the prior 30 days. Amex also purchased a warrant allowing it to buy another 1.28 million shares during the next two years, though its potential investment is capped at 15.2 percent.
Amex said it would continue to provide spending data to customers that opt to use other expense reporting systems. About half of Concur's clients use the Amex card, the companies said.
Concur said it would continue to take data feeds form other payment sources and support reseller agreements with other bank partners, such as U.S. Bank, Citi and Bank of America, according Concur founder and executive vice president of marketing Michael Hilton. However, as part of this week's agreement, U.S. Bank president Rob Abele, a Concur director since 2006, left the Concur board as Amex vice chairman Ed Gilligan took a seat with the company's investment.
According to a media statement attributed to American Express Global Commercial Card president Anré Williams, "We're seeing growing demand from corporations for solutions that offer additional savings and control by automating labor-intensive expense management processes. This partnership enables American Express to provide corporate clients with an integrated system to make their expense reporting process easier."
The companies did not openly suggest a benefit for Concur's Cliqbook travel booking application. Such a dynamic would put Amex's card sellers in the awkward position of pushing a travel booking solution that competes with the tools American Express Business Travel has been promoting, mainly Rearden Commerce's. But Concur continues to emphasize its integrated travel and expensesuite, and CEO Steve Singh this week told analysts that it would be "free to sell" other services beyond expense to prospects delivered by Amex.
Analysts pressed Singh to reveal whether Concur's integrated travel and expense solution is part of the Amex sales toolkit. He didn't say it was, but that may not matter if "the selling is not [necessarily] being done by Amex. It can be, but is not presumed to be. In the vast majority of markets, we'll receive leads and our field organization will go close the sales. In certain market segments, Amex may choose to resell the solution. In all cases, the customer is contracting with Concur and will be deployed and serviced by Concur. Concur will share revenue with Amex for new customer sales and joint customers," Singh said.
American Express sales people are beginning training on Concur Expense "immediately," said Singh, although Concur does not expect revenue benefits until its 2010 fiscal year, which starts in October 2009.
Meanwhile, Concur will spend some of the $251 million that Amex invested in it on sales and support for an anticipated swell in customers. Concur said it wants to grow from about 7,000 clients to more than 40,000. Amex offers a sales channel of tens of thousands of clients from whom it can now derive revenue by offering them Concur. Previously, Singh said Concur thought of Amex as its "largest potential competitor."
The exclusivity with Concur forced Amex to end a relationship forged in 2002 with IBM Global Expense Reporting Solution. IBM's Ray Curatolo said IBM would continue to support the 400 small to midsize clients that Amex brought into the program. For IBM, the termination represents an "area of opportunity" to leverage its own sales infrastructure and forge new relationships to sell the recently overhauled GERS, Curatolo said.