US-based payment technology company Wex has agreed to acquire Electronic Funds Source (EFS), a provider of corporate payments solutions, from Warburg Pincus for about $1.1bn in cash and four million shares of common stock.
The acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to be immediately accretive to Wex’s adjusted net income.
WEX said that the combined entity will serve the needs of all sizes and types of fleets by drawing on strengths from both companies’ offerings to provide a more efficient, comprehensive and better-integrated solution to all customers.
Wex expects the transaction to further boost its earnings and reduce its exposure to fuel price sensitivity. About 16% of EFS’ revenue is exposed to fuel prices.
WEX added that its customers can expect the addition of a variety of corporate card options, including a single, multipurpose card.
Following the deal, investment funds associated with Warburg Pincus will become WEX’s shareholder, while Warburg Pincus’ managing director and member of the executive management group, Jim Neary, will join WEX’s board of directors.
The company intends to realize run-rate synergies of $25m over a three year period. The transaction has been unanimously approved by the WEX board of directors.
WEX president and CEO Melissa Smith said: "We believe this acquisition strengthens our value proposition to customers with a portfolio of best-in-class offerings that will better meet their evolving needs.
"Additionally, we have the opportunity to draw on the strengths of both companies to drive further scale across the organization, enhance our existing over-the-road business, better serve the needs of mixed fleets and improve the functionality and service we provide to our customers."
EFS president and CEO Scott Phillips said: "We are very pleased to be joining forces with a great organization like WEX, which shares our focus on continued product innovation, superior service and maintaining long-term customer relationships."