FleetCor Technologies Inc., announced in a statement that it has signed a definitive agreement to buy Comdata Inc. for $3.45 billion.
FleetCor a leading global provider of fuel cards, and workforce payments products to businesses, plans to buy $2.4 billion of new debt and issue as well as about 7.3 million of its shares to Ceridian LLC which owns Comdata, a Norcross, Georgia-based Company said in a statement yesterday.
As per the terms of the deal, FleetCor, which is a supplier of specialized payment products and services to commercial auto fleets, oil companies and petroleum marketers will expand in North America and will commence virtual bank-card payments business. The acquisition will benefit FleetCor in terms of earnings and diversity, as indicated by the statement issued.
“That’s a transformational acquisition for FleetCor,” Wayne Johnson, an analyst at Raymond James Financial Inc. in Atlanta, said in a phone interview. “It expands their domestic business dramatically.”
With customers globally replacing cash and checks with electronic payments, deals through credit and debit cards are increasing rapidly. According to the data compiled by Financial Technology Partners LP, a San Francisco-based investment bank, initial six months saw 125 pending and finished deals in payment industry, which was a 76 percent increase from the first half of last year. Thus, payment-services companies are competing to be a market leader using innovations and by expanding overseas.
“We expect the acquisition to be meaningfully accretive to earnings in fiscal year 2015,” FleetCor Chief Financial Officer Eric Dey said in the statement. “The new credit facility will also provide additional liquidity for future business development activity.”
Comdata will put in 50 cents to 60 cents to FleetCor's balanced net income for every share in 2015, as indicated by the announcement. FleetCor said it predicts that the arrangement will be finished before the year is over. Barclays Plc prompted FleetCor and JPMorgan Chase & Co. furthermore Deutsche Bank AG prompted Ceridian.
Comdata issues as well as carries out processes for electronic payments for auto fleets and also provides virtual and gift cards. Ceridian LLC is owned by Fidelity National Financial Inc., which is the largest title insurer in the U.S.