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Amex Negotiating To Buy SMB Lender Kabbage

 |  August 11, 2020

American Express (Amex) could be the new owner of Kabbage, one of the largest online business lenders.

Sources told Bloomberg News that talks are underway and that the all-cash sale could be announced soon.

If the deal closes, it would value the SoftBank Group- and Reverence Capital Partners-backed lender at as much as US$850 million, the news service reported.

While Amex is the nation’s largest provider of small business credit cards, the purchase of Atlanta-based Kabbage would propel it to become a bigger issuer of loans to small shops. Kabbage offers businesses lines of credit of up to US$250,000.

Amex has a track record for adding companies. Last year, the New York-based global financial services corporation, acquired Pocket Concierge, a restaurant reservation platform that provides customers with access to more than 800 restaurants in Japan.

Also in 2019, Amex announced that it was acquiring Resy, the New York-based restaurant reservation platform whose software was used by 4,000 restaurants in 10 countries. And two years ago, American Express purchased UK FinTech startup Cake Technologies, which allows restaurant-goers to pay a bill more easily.

Bloomberg reported that Kabbage was most recently valued at more than US$1 billion after SoftBank invested US$250 million into the lender in 2017. Still, the US$850 million price tag is far greater than the US$90 million in cash and stock that Enova International agreed to pay for On Deck Capital in July.

Last month, Amex reported a profitable second quarter, but its revenue sharply dropped, as consumer spending collapsed amid a reemergence of the COVID-19 pandemic. The company reported large drops across all of its operations. Its Global Consumer Services Group saw net income fall to US$527 million from US$881 million for the same period one year ago. Likewise, the company’s Global Commercial Services unit recorded a US$60 million quarterly loss versus a US$561 million gain a year ago. And Amex’s Global Merchant and Network Services business saw net income fall to US$66 million from US$564 million in the same period last year.

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