Western Union (WU) to Sell Speedpay to ACI Worldwide (ACIW) for $750M; Announces New $1B Buyback
Get Alerts WU Hot Sheet
Join SI Premium – FREE
The Western Union Company (NYSE: WU) and ACI Worldwide (NASDAQ: ACIW) announced they have entered into a definitive agreement for ACI to acquire Speedpay, Western Union’s United States bill pay business, for $750 million in an all-cash transaction. The transaction is expected to close by the end of the second quarter of 2019, subject to customary closing conditions and regulatory approvals.
The Company also announced that its Board of Directors approved a new three-year share repurchase authorization. The new $1.0 billion share repurchase authorization will expire December 31, 2021 and is in addition to the $544 million remaining under the previous authorization as of December 31, 2018.
Hikmet Ersek, president and CEO of Western Union, stated, “Divesting the Speedpay business allows us to concentrate our resources on our cross-border money movement strategies and monetize a non-core asset for our shareholders. Our strategy remains focused on expanding our digital services, leveraging our platform to unlock new cross-border, cross-currency payments opportunities, and generating additional operating efficiencies.”
Ersek added, “We are also pleased to announce a new share repurchase authorization, which signifies our continued commitment to shareholder-focused capital allocation.”
Speedpay provides electronic bill presentment and payment solutions to a variety of business sectors in the U.S., including utilities, auto finance, mortgage, consumer finance, insurance, telecommunications, and government finance. The Speedpay business generated approximately $350 million of revenue in 2018, representing 6% of total Western Union revenue, and approximately $90 million of operating income, which includes approximately $10 million of corporate expenses allocated to the business.
The Company expects to record a pre-tax gain on the sale of approximately $500 million when the transaction closes. Net proceeds of the transaction, after taxes on the gain, are projected to be approximately $575 million and the Company intends to use the proceeds to return capital to shareholders and manage its capital structure.
The Company will update its 2019 outlook to reflect the divestiture, including the gain on sale impact to GAAP EPS and the effect from removal of a partial year of Speedpay earnings, as well as any impact from use of proceeds in 2019, in its first quarter earnings release. The Company does not expect the divestiture to affect its 2019 operating margin outlook of approximately 20%.
Centerview Partners LLC is acting as financial advisor to Western Union on the Speedpay transaction and Sidley Austin LLP is acting as legal counsel.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- IBM tumbles on soft Q1 revenue; announces HashiCorp $6.4bn acquisition
- Standard BioTools (LAB) Announces Operational Restructuring Plan, Cuts 10% Staff
- Midday movers: Meta, IBM, Caterpillar fall; Chipotle rises
Create E-mail Alert Related Categories
Corporate News, Hot Buybacks, Hot Corp. News, Hot M&A, Mergers and Acquisitions, Spinoffs, Stock BuybacksRelated Entities
Stock Buyback, Earnings, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!