By Rip Watson, Senior Reporter This story appears in the Aug. 18 print edition of Transport Topics.
Trucking fuel card provider Comdata Inc. has agreed to a $3.45 billion acquisition by FleetCor Technologies Inc., another provider of fuel cards, which intends to expand its North American electronic fleet payment services.
The Norcross, Georgia-based buyer on Aug. 12 said it plans to issue $2.4 billion of debt and pay for the rest with about 7.3 million new shares issued to Ceridian, Comdata’s parent.
“Comdata is a leading provider in fleet trucking in North America,” FleetCor CEO Ronald Clarke said during a conference call to explain last week’s move to investors.
He described the move as a “great way” to expand in the truck fuel card processing sector. “The Comdata brand is synonymous with trucking and fueling,” he added.
Clarke also said the purchase brings specialized technology as well as a trained sales force to more effectively reach the trucking market.
FleetCor’s U.S. fuel card offerings are made under the Fuelman and Fleet Cards USA brand names. FleetCor’s current markets also include services to commercial auto, oil companies and petroleum marketers.
Comdata, which was spun off by Ceridian last year, hasn’t disclosed its revenue and earnings from trucking industry services.
When Brentwood, Tennessee-based Comdata said earlier this year that it planned an initial public offering of its stock, financial details were shielded from the public. That step was allowed under a 2012 federal law known as Jump Start Our Business Startups that allows emerging-growth companies with annual revenue of less than $1 billion to keep financial details confidential in IPO filings.
FleetCor, a worldwide vendor of fuel cards, had net income of $163.7 million in the first half of 2014 on revenue of $527.4 million, an increase of more than 20% in both. About half of its revenue is from international services.
Comdata, a 45-year-old company, last year processed 1.4 billion transactions in nearly 50 countries, according to a statement on its website.
Acquisitions are accelerating among electronic payment companies, according to Financial Technology Partners, a San Francisco-based investment bank that seeks to capitalize on growing use of that technology to make purchases.
The firm has identified 76% more pending and completed deals in the credit and debit card transaction sector so far this year.
“That’s a transformational acquisition for FleetCor,” Wayne Johnson, an analyst at Raymond James Financial Inc. in Atlanta, told Bloomberg News. “It expands their domestic business dramatically.”
Clarke also identified Comdata’s corporate payment program for national accounts as a reason for the acquisition. Comdata also offers gift card and health care payment services.
FleetCor said in a statement on Aug. 12 that it anticipates next year’s earnings will rise about 10% because of the acquisition, as measured by net income that excludes commissions to merchants.
Ceridian is owned by Fidelity National Financial Inc., which provides title insurance and funds affiliated with private-equity firm Thomas H. Lee Partners.
