Electronic Funds Buys T-Chek for $302.5 Mln. in Fourth Deal for Fuel Card Sector This Year
This story appears in the Oct. 22 print edition of Transport Topics.
C.H. Robinson Worldwide Inc. last week sold its T-Chek fuel payment card unit to Electronic Funds Source LLC for $302.5 million.
The Oct. 16 sale was the fourth in seven months in the fuel card sector. It transfers a small piece of brokerage-focused C.H. Robinson’s business to EFS, a company created in March by combining fuel card vendors EFS Transportation Services and Transportation Clearing House.
“As the payment services industry continues to consolidate and evolve, scale and alignment with the financial services sector are becoming increasingly important,” C.H. Robinson CEO John Wiehoff said in a statement. “We felt, for T-Chek’s long-term success, that strategically, it was the right time for T-Chek to join forces with EFS.”
Other recent transactions in the fuel card sector include the purchase of truck fuel card vendor Fleet One by payment processor Wright Express and the acquisition of TransCard, also a fuel card vendor, by U.S. Bancorp.
“As the industries continue to advance, the T-Chek business and the customers they serve are a much better strategic fit within EFS,” said Scott Phillips, CEO of EFS, Ogden, Utah. “We do not expect T-Chek customers to require a card change or reissuance.”
T-Chek represented about $50 million, or 4%, of Robinson’s revenue.
A report by Credit Suisse analyst Chris Ceraso said the proceeds from the T-Chek sale would be used to help pay for Robinson’s acquisition of freight forwarder Phoenix International.
That $635 million purchase by Robinson, Eden Prairie, Minn., was announced Sept. 25 as the company moved to broaden its international presence.
About 80% of Robinson’s revenue is generated by domestic freight brokerage, with the rest, other than T-Chek, coming from international air and sea freight, as well as sourcing of produce.
Other fuel card companies include Comdata, a subsidiary of Ceridian, RTS Fuel Advantage and Fuelman.
The price of the latest fuel card-related transaction fell short of the $369 million paid by Wright Express, South Portland, Maine, when it purchased Fleet One from two private equity owners.
Terms of the U.S. Bancorp purchase of TransCard were not disclosed, but it moved the Minneapolis-based bank holding company into the Classes 7 and 8 fuel card business.
“While T-Chek’s technology and services have historically focused on the transportation industry, scale has become increasingly advantageous in payment services, and the business has recently expanded to other industries,” Nate Brochmann, an analyst for William Blair & Co., said in a report.
Phillips also said in a statement that the acquisition would result in strategic benefits and the addition of new products and markets.
