Western Union and FLEETCOR are nearing an agreement to sell WU's business payments operations to the fleet payments firm, according to reports in PE Hub on Wednesday (Nov. 15).
Citing three unnamed sources, reports said Citi is advising on the deal, which could fetch $600 million for the B2B payments operations. Though unconfirmed, the deal would not come entirely as a surprise. In September, Deutsche Bank Analyst Ashish Sabadra said FLEETCOR is a likely buyer of Western Union's business payments unit.
The prediction followed Bloomberg reports that Western Union was moving to sell the operations, which provides cross-border B2B payments services. Sabadra said in a research note that FLEETCOR's Cambridge Global Payments, which it acquired last year, positions the firm as an expanding B2B payments company, and therefore an acquisition of Western Union business payments assets would make sense.
At the time of Bloomberg's report, a Western Union representative said the company does not publicly comment on possible mergers and acquisitions, but an executive at the institution said it was open to divesting its business payments operations.
"We certainly need to evaluate other potential opportunities for that business," said the firm's Chief Financial Officer Rajesh Agrawal at a banking conference at the time. "Our goal is going to be to maximize the value of that business, whether it's in our hands or someone else's."
FLEETCOR, meanwhile, also expressed continued interest in M&A to grow its operations.
"I hope the message is clear," said CEO Ron Clarke during the company's third-quarter earnings call in October. "We're working on a number of new incremental growth initiatives in each of our four businesses. … We're going to keep getting behind the mid-sized accounts we're on, and we're going to find a way internally, or through [M&A] deals, to build a bigger position in the small market."