MasterCard is acquiring the Travelex operations that manage and deliver consumer and corporate prepaid travel cards to business partners globally, including financial institutions, retailers, travel agents and foreign exchange bureaus.
These operations also manage cross-border payroll, per-diem and expense-management prepaid cards for corporations.
MasterCard said that it has no plans to issue cards directly as a result of this transaction.
As part of the transaction, MasterCard and Travelex signed a long-term contract whereby MasterCard will provide program management services for the Travelex Cash Passport prepaid card sold through Travelex stores and online channels.
MasterCard added that acquiring Travelex’s CPM operations will strengthens its suite of global prepaid business assets and allows the company to focus on countries outside of the US to accelerate prepaid market entry and growth.
The retail distribution of cards through Travelex channels also remains a strategic priority. As part of the transaction, Travelex has agreed with its lenders to use part of the proceeds to reduce its senior debt facilities.
MasterCard expects the transaction to be $0.04 dilutive to its 2011 earnings per share due to amortization and one time transaction and integration costs. For 2012, MasterCard expects the transaction to be neutral and accretive beginning in 2013. The transaction is expected to close in the first half of 2011.
MasterCard president and CEO Ajay Banga said that this acquisition enables MasterCard to play a greater role in the prepaid value chain, allowing MasterCard to shape the future of prepaid, especially in high-growth markets and in the attractive cross-border payments space where MasterCard can displace cash and traveler’s cheques.
Travelex CEO Peter Jackson said that the sale of CPM will allow the company to accelerate investment plans, particularly in higher growth regions such as Asia and South America and in the growing e-commerce channel.
