In this acquisition announcement at businesswire reviews details around the agreed Deluxe acquisition of First American Payment Systems. Readers will recognize the 100-year-old Deluxe, the Minnesota-based Fortune 1000 that is traditionally known for check processing and receivables management but undergoing a transformative process as the world moves quickly towards digital payments.
First American is a privately held fintech company out of Texas that does merchant acquiring and tech solutions. One might describe the 30 year old company as a large ISO/processor for small and medium merchants that has grown substantially in that timeframe. So this move seems logical as the consolidation trend that started a couple of years ago continues across many forms of payment processing companies.
‘Deluxe…today announced an agreement to acquire First American Payment Systems (“First American”) for $960 million in cash, subject to customary adjustments. This transaction is expected to accelerate the company’s transformation into a leading payments technology company as part of its One Deluxe strategy…. “This is a major, logical and responsible next step in our transformation. With electronic payments playing an increasingly important role across the economy, the addition of First American’s independent, leading payments platform will advance our One Deluxe strategy and our overall growth trajectory,” said Barry McCarthy, President and CEO of Deluxe. “Deluxe serves an integral part of the payments industry, with our software and services processing more than $2.8 trillion annually. First American’s end-to-end payments platform presents significant cross-sell opportunities as we continue to invest in our higher growth Payments segment, and this combination will create a multitude of opportunities to drive tremendous value for our shareholders”. ‘
The posting is worth a read since it has a lot more detail that these types of announcements usually carry. The fit seems quite good since there is not much visible overlap across the business models, so some economies of scale can occur along with fresh combined revenue opportunities. The SME space is a generally coveted target across the payments industry so that would be a clear play for the expanded Deluxe.
‘ “Today’s announcement is a testament to the accomplishments of the First American team over the last 30 years that have established our company as a deeply trusted payments partner with an unwavering focus on customer service,” said Neil Randel, Chief Executive Officer of First American. “In joining forces with a Fortune 1000 publicly traded company, we are advancing our mission to create innovative solutions as we continue to help our customers succeed and prosper. I look forward to working closely with Barry, Mike and the team to exponentially grow our combined company and deliver enhanced value to all of our stakeholders.”…Upon close of the transaction, the First American management team will join the Deluxe Payments team, and Randel will become Managing Director, Merchant Services.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
