Credit card company American Express (NYSE:AXP) said it was purchasing European marketing firm Loyalty Partners for about $660 million in a bid to expand its card usage in international markets.
Under the terms of the deal, AmEx will buy Loyalty Partners for 425 million euros and will pay another 71 million euros to Loyalty’s current management over the next five years, based on business performance.
Continue Reading Below
AmEx, which is primarily known for its charge cards, said the acquisition will add about 34 million new customers to its membership – primarily in Germany, Poland and India.
“The loyalty coalition model is growing rapidly in many parts of the world,” said Ed Gilligan, American Express's vice chairman, in an statement. “Increasingly, consumer decisions about where to shop and how to pay are based on loyalty offerings, and Loyalty Partner is a premier player in this space.”
Like other credit card companies, American Express has been looking for new sources of revenue as practices such as late-payment fees and interest rates were reined in with the recently-enacted Dodd-Frank financial regulatory reform law.
But unlike its competitors, AmEx’s relies less on interest charges and more on what it brings in from merchants and banks who accept AmEx’s charge cards through transaction fees.
American Express expects the transaction to close in the first quarter of 2011 and it is subject to regulatory approval.
Shares of American Express were down 0.7% on Thursday to $45.81.