The payments processor Moneris Solutions Inc. said its deal to buy the assets of the acquirer Humboldt Merchant Services LP would give it a significant geographic and product-line expansion.
Moneris, a Schaumburg, Ill., unit of Moneris Solutions Corp. of Toronto, primarily serves merchants in the Midwest. "What Humboldt brings us is a fairly large presence in the Southwest and the West Coast that we don't currently have," said Greg Cohen, the president of the U.S. subsidiary.
Buying the Eureka, Calif., company would flesh out Moneris' product portfolio and "bring some new distribution channels that we currently do not operate in. They have a fairly large and robust independent sales organization and independent contractor channel, and we are not in that business," Mr. Cohen said in an interview last week.
"To kind of create the services and technology necessary to service that business and to obviously build a brand and to build a name in that segment would take years," he said.
The acquisition would let Moneris "get a quick jump-start into that segment."
The deal for Humboldt, which Mr. Cohen said handles close to $2.5 billion in card transactions a year, was announced last week and is expected to close by yearend.
The purchase would bring Moneris 18,000 new merchant clients. Mr. Cohen would not discuss other terms, including the price of deal.
Moneris, a joint venture of Royal Bank of Canada and Bank of Montreal, expects to continue expanding both its product suite and its geographic reach in this country, Mr. Cohen said. "We are acquisitive throughout the United States."
In July, Moneris bought the merchant payments business of Alabama National BanCorp., which was concentrated in the Southeast, along with its merchant processing portfolio. (Alabama National is owned by the RBC Bank unit of Royal Bank of Canada.)
The Humboldt deal "does fall in with our strategic plan of being a full-service electronic payments receivables solution provider and not just a credit card processor," Mr. Cohen said.
The goal of any further acquisitions would be "to kind of round out a full payments solution and morphing out of just being in the credit card processing business, which is our roots," Mr. Cohen said.
Andrew Schmidt, a research director at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said "it does look like Moneris is trying to consolidate and expand the services they provide in the U.S."
Moneris has been adding services and customers at a good clip in recent months, and buying Humboldt would add a substantial number of merchant clients in a choice market, Mr. Schmidt said.
"California's one of the largest economies in the world," he said. "By being able to access that direct market, it would give them a great foothold in the U.S." and "a great test bed" for new products and services."
Humboldt is notable for its ability to handle some of the smaller card brands, such as Wright Express fleet cards, going beyond the major card networks such as Visa Inc. and MasterCard Inc., Mr. Schmidt said.
Buying the merchant acquirer would broaden Moneris' appeal to business customers, which are the typical customer for these less well-known card brands, he said.
In May, Moneris' parent company bought the point of sale service provider Keycorp Canada Inc. of Montreal from Keycorp Ltd. of Australia.
