American Express Co. has agreed to acquire Loyalty Partner, a leading European marketing services company.
Loyalty Partner's business mirrors that of Amex's Membership Rewards program, Business Insights division and Loyalty Edge platform, Ed Gilligan, Amex vice chairman, said Dec. 16. Loyalty Partners operates loyalty programs in Germany, Poland and India and has a combined customer base of 34 million cardholders. It also provides market analysis and consulting services.
"Amex has a number of key things to drive the growth of the company, including trying to accelerate international business, and [this deal] brings in 34 million customers," Gilligan said. The deal also enables Amex to "build fee revenue to diversify, but do it in adjacency to our existing business and in the loyalty space."
Amex expects the purchase, which is subject to regulatory approval, to close in the first quarter of 2011. It values the deal at $660 million. The transaction includes an up-front cash payment of $566 million plus $94 million in equity interest held by Loyalty Partner's management. Amex said it would acquire that interest over the next five years at a value based on performance.
The acquisition is a good fit for Amex and will help it meet its goals for expanding outside the United States, said Megan Bramlette, a director at Auriemma Consulting Group.
"Location-based marketing, coupled with mobile apps, is a pretty powerful tool," Bramlette said. "The fact that Loyalty Partner has got this platform really puts Amex in a pretty nice position to take some big strides forward in this area, and this is the way the industry is going to move forward."