The processor Global Payments Inc. has agreed to sell its money transfer unit to a private-equity company to focus on acquiring.
The Atlanta company has been actively expanding its worldwide acquiring efforts in recent years, but its remittance operations have been less successful. Global Payments said Wednesday that selling the unit to Palladium Equity Partners LLC would bring in $85 million to $100 million, depending on how it performs.
The transfer business accounts for about 6% to 7% of Global Payments' revenue and "is less core" to the company, James G. Kelly, its president and chief operating officer, said in an interview Wednesday. Selling the business "allows us to put all our energy into acquiring and processing," he said.
The remittance business operates as DolEx Dollar Express in the United States and Europhil in Europe, and mainly handles payments to Latin America and the Philippines.
The transfer unit generated revenue of $31.4 million in Global Payments' fiscal first quarter, which ended Aug. 31, down 15% from a year earlier.
Thomas McCrohan, an analyst with Janney Capital Markets, wro in a research note Wednesday that DolEx's revenue would fall 10% in 2010, in part because remittance volume between the United States and Mexico is down this year.
He raised his 12-month stock target for Global Payments to $60 a share, from $52, saying DolEx has a "lack of synergies with core merchant processing." Its shares closed Wednesday at $51.89, down 3.48% from Tuesday.
