SafeCard Services Inc. entered another phase of its new growth cycle this week with the announcement that it will acquire Wright Express Corp.

It is the first such transaction engineered by SafeCard chairman and chief executive Paul G. Kahn, who arrived in December on a mission to grow and diversify the Cheyenne, Wyo.-based credit card-registration and telemarketing company.

Wright Express, a South Portland, Maine, company that provides credit, payment, and information services for commercial-vehicle fleets, fills both of Mr. Kahn's bills.

With about $11 million of revenue last year, Wright Express is at less than 10% the $156.6 million that SafeCard reported in the fiscal year that ended last October. But Wright has been growing at a compound annual rate above 40% for the past four years, while SafeCard has been in single digits the last two and a half years.

And Mr. Kahn pointed out there are synergies: the two companies share some of the same oil companies as clients. SafeCard markets add-on services to their credit card customers, and Wright issues cards and provides related services that help fleet managers at the likes of BellSouth, DHL, and Terminix monitor and control expenses.

Customer Base

Wright Express has 40,000 customers for its fleet cards, which are accepted at 80,000 locations including Mobil, Texaco, Exxon, and Getty stations.

As a private-label card provider - customers in that business line include Clark Oil, Crown Central, Fina, and Getty - Wright can fit in with Mr. Kahn's plan to make SafeCard a factor in credit card cobranding.

"We focus on value-added services - both core and new businesses - and on delivering them with total quality," Mr. Kahn said in an interview, emphasizing the type of commitment that brought him considerable renown at AT&T Universal Card Services.

While he was head of AT&T's bank credit card venture, it won the U.S. government's Malcolm Baldrige National Quality Award.

Aggressive Manager

In June 1993, soon after Mr. Kahn left AT&T - he reportedly wanted to diversify into other financial businesses more aggressively than his senior managers preferred - he joined the Wright Express board of directors. Thus began a tie that led to the definitive agreement announced on Monday, in which SafeCard will pay $35.5 million in cash.

"I learned about the company as a board member, became intrigued with the possibilities and excited about where we can take it," Mr. Kahn said.

The companies expect to complete the deal in mid-September, pending approvals by regulators and Wright Express stockholders.

It seems airtight: SafeCard, which reported $170 million of cash and investments on its Oct. 31, 1993 balance sheet, obtained options from certain Wright shareholders assuring it of a majority of proxy votes in favor of the transaction.

'Intact Subsidiary'

Mr. Kahn said Wright and its 130 employees will remain an "intact subsidiary" under president and chief executive John R. Birk. But he promised that Wright will benefit from investments by its new parent.

Although SafeCard has been through a couple of relatively rocky years, and its stock price has dropped to about 30% below the $20.75 peak it hit shortly after Mr. Kahn's arrival, its subscription revenues for the half-year ending in April rose 9% to a record $83.9 million.

The revenues come mainly from 14 million consumers, customers of 150 card issuers in the United States, who use the notification service for lost and stolen credit cards.

SafeCard has recently had a bottom-line problem. Net earnings for the latest fiscal quarter fell to $3.8 million from $8.5 million a year earlier. The six-month figure declined to $12.2 million from $17.4 million.

Ongoing Litigation

"Special items" were the cause. Litigation with Peter Halmos, a SafeCard cofounder, has been a continual drain, to the tune of $4.8 million in the fiscal first half. There was also a $3.5 million restructuring charge in the April quarter, in connection with severance payments to the management group that Mr. Kahn inherited.

But SafeCard also settled a lawsuit filed by Mr. Halmos' brother, former company chairman Steven Halmos, and booked a $4.3 million gain by settling another action it initiated. It said it was working to ease the legal burdens and concentrate on evolving into "a consumer-driven marketing and servicing organization with multiple lines of business."

Mr. Kahn's removal of the old management guard in April - along with his decision to consolidate the 500-employee firm's operations in Cheyenne and dose the second site in Florida - sent a strong signal about how the company was changing. The Wright Express announcement reinforced it.

Product Offerings Expand

"The acquisition not only expands SafeCard's relationships with current and new major oil company clients, it adds to SafeCard's product offerings," Mr. Kahn said.

"As a value-added information-services enterprise with a history of recurring revenues and a high rate of growth in both operating cash flow and revenues, Wright Express enhances our ability to achieve SafeCard's strategic and financial objectives," the CEO added.

Wright's Mr. Birk, who will report to Mr. Kahn, also expects the SafeCard connection to help "expand our product and geographical market consistent with SafeCard's overall strategic objectives. We believe the transaction will further accelerate our growth rate and help maintain our leadership position in the fleet-fueling industry."

Executive Named

In another announcement this week, SafeCard said it appointed Harry M. Strauss executive vice president of information technology.

Mr. Strauss, 54, has been an information systems consultant and president of Microtec Planning, a Portland, Ore., firm that has been advising corporations of all sizes since 1980. He was also president of a pharmaceutical company, and before forming Microtec was general manager of the URS Corp. software-development division.

"His ability to use information technology to significantly enhance a company's net cash flow and improve quality service will be invaluable [to] bolster SafeCard's current business strategy and our capacity to bring new products to market sooner," Mr. Kahn said. "Harry is especially known in the information industry for his unique skills in assessing the suitability and market potential of new products and using technology to improve a competitive advantage."

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