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 Corp.- and Reverence Capital Partners-backed lender at as much as $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 be a bigger issuer of loans to small shops. Kabbage offers businesses lines of credit of up to $250,000.
Amex and Kabbage declined to comment.
Shares of Amex rose 1.75 percent in early New York trading on Tuesday (Aug. 11), up from $101.62 at the close on Monday (Aug 10).
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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 U.K. 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 $1 billion after SoftBank invested $250 million into the lender in 2017. Still, the $850 million price tag is far greater than the $90 million in cash and stock that Enova International Inc. agreed to pay for On Deck Capital Inc. 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 $527 million from $881 million for the same period one year ago. Likewise, the company’s Global Commercial Services unit recorded a $60 million quarterly loss versus a $561 million gain a year ago. And Amex’s Global Merchant and Network Services business saw net income fall to $66 million from $564 million in the same period last year.
In other news, Rick Roberts, analyst and portfolio manager on the public equity team at New York-based Vulcan Capital, told PYMNTS that technology has made it possible for “anybody to be a bank now” in the sense of issuing digital credit cards, originating loans or enabling digital payment methods for consumers.
