WEX To Buy Electronic Funds Source For More Than $1 Bln In Cash And Stock

(RTTNews) - Corporate payment solutions provider WEX Inc. (WEX) said Monday that it has agreed to acquire Electronic Funds Source LLC, a provider of transportation services payment solutions, for more than $1 billion in cash and stock.

South Portland, Maine-based WEX noted that the acquisition will strengthen its offerings in both the over-the-road and corporate payments market and also help it to reduce its exposure to fuel price sensitivity.

WEX will pay a total consideration of about $1.1 billion in cash and 4 million shares of common stock to be issued to investment funds affiliated with private equity firm Warburg Pincus, the current owner of Electronic Funds Source or EFS.

Upon closing, investment funds affiliated with Warburg Pincus will become the largest shareholder of WEX. Warburg Pincus' managing director and member of the executive management group, Jim Neary, will join WEX's board of directors.

The transaction, which has been unanimously approved by the WEX board of directors, is subject to regulatory approvals.

EFS has a proprietary network of over 14,000 accepting locations in the U.S. and Canada for the over the road or OTR fleet industry and services a diverse base of more than 17,000 customers.

WEX noted that EFS' track record and customer acceptance in mid- and large-sized OTR fleet segments is an ideal complement to the company. According to WEX, EFS' OTR platform will add important functionality in controls, permitting, fuel price analytics, mobile account maintenance and strong acceptance in Canada.

In addition, WEX customers will benefit from the addition of a variety of corporate card options, including a single, multi-purpose card.

Following closing of the transaction, WEX expects the acquisition to be immediately accretive to its adjusted net income and also expects to realize run-rate synergies of about $25 million over a three year period, excluding one-time integration costs. Further, the company to realize about $275 million in present value of tax benefits.

WEX is trading at $98.25, up $6.14 or 6.67 percent on a volume of 162,934 shares.