ME-based WEX has entered into a definitive agreement to acquire Electronic Funds Source for $1.1 billion in cash and 4.0 million shares of common stock to be issued to investment funds affiliated with Warburg Pincus, EFS’ current owner. The acquisition is expected to be immediately accretive to adjusted net income.
EFS’ strong track record and broad customer acceptance in mid- and large-sized over-the-road (“OTR”) fleet segments is an ideal complement to WEX. The combined company would serve the needs of all sizes and types of fleets by drawing on strengths from both companies’ offerings to provide a more efficient, more comprehensive and better-integrated solution to all customers.
EFS’ sophisticated OTR platform adds important functionality in controls, permitting, fuel price analytics, mobile account maintenance and strong acceptance in Canada. Furthermore, WEX and EFS have focused on different parts of the corporate payments spectrum, which will allow customers to benefit from the combined company’s more diverse set of capabilities. For WEX customers, this includes the addition of a variety of corporate card options, including a single, multi-purpose card. Moving forward, the combination would deliver continuous innovation and sector expertise to anticipate industry trends and adapt the combined offering accordingly.
Additionally, the combination will further diversify WEX’s earnings and help to reduce its exposure to fuel price sensitivity. WEX estimates that approximately 16% of EFS’ revenue is exposed to fuel prices.
Upon closing the transaction, the acquisition is expected to be immediately accretive to adjusted net income. The Company expects to realize run-rate synergies of approximately $25 million over a three year period, excluding one-time integration costs, and to realize approximately $275 million in present value of tax benefits.
The transaction, which has been unanimously approved by the WEX board of directors, is subject to regulatory approvals and other customary closing conditions.
Upon closing, investment funds affiliated with Warburg Pincus will become WEX’s largest shareholder. Warburg Pincus’ managing director and member of the executive management group, Jim Neary, will join WEX’s board of directors.
WEX serves a global set of customers and partners through its operations around the world, with offices in the United States, Australia, New Zealand, Brazil, the United Kingdom, Italy, France, Germany, Norway, and Singapore.
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