Payments and travel company American Express Co. (AXP) said Monday that the company would acquire alternative payments company Revolution Money for $300 million. The deal is expected to close in the first quarter of 2010.
American express intends to use Revolution Money's internet based platform to extend the company's focus beyond its traditional payments arena.
Revolution Money's payment processing platform integrated with a low-cost payment card network enables a wide variety of payment products to meet the needs of issuers, merchants and consumers. Revolution Money's platform provides a secure way to make internet payments. The revolution cards does not display account numbers and names and, transactions from revolution cards need to be authorized by using a PIN number, these enables the customers to keep their important information secure.
Further, Revolution Money's online person-to-person payment accounts are FDIC insured which makes the the company's payment accounts ideally suitable for social and instant messaging networks. Revolution Money also offers a prepaid card which links the accounts that can be used for offline payments or to withdraw cash from ATMs throughout the United States.
Commenting on the acqusition, Kenneth Chenault, chairman and chief executive officer of American Express said, "New payments products and platforms are evolving rapidly and it's important for us to keep identifying cutting edge technologies that can extend our leadership beyond the traditional payments arena."
"Revolution Money has a lot of room to grow as it competes head-to-head with other online and person-to-person payment providers. We are committed to using our global brand recognition, marketing reach and network expertise to help reach a critical mass of customers," Chenault added.
St. Petersburg, Florida-based Revolution Money is part of the family of companies within privately held Revolution LLC, which was founded by AOL Co-founder Steve Case.
Upon closing of the acquisition by American Express, Jason Hogg, founder and chief executive officer of Revolution Money, will continue as president and chief executive officer. Angel investor, major shareholder and Chairman of Revolution Money Ted Leonsis will become a special advisor to American Express working with Chenault on overall digital and online payments strategy.
"Revolution Money's technology brings together the online and offline worlds in a way that can transform the way consumers securely transact. And with the low cost structure enabled by internet technology, American Express is now even better positioned to scale their online presence over time," Leonsis said.
On completion of the buy-out, Revolution Money would operate as a subsidiary of American Express and would become the first component of its recently formed Enterprise Growth organization.
American Express had formed Enterprise Growth organization to leverage American Express' existing assets and capabilities to generate higher fee revenue and to drive the company's entry into new payment areas and related businesses.
Goldman Sachs, Morgan Stanley, Citigroup and Deutsche Bank also hold interest in Revolution Money, the company's website said.
AXP is currently trading at $41.51, up $0.15 or 0.37% on a volume of 7.39 million shares on NYSE.
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