Fleetcor To Expand Its B2B Payment Footprint With Pending Cambridge Acquisition

Fleetcor Technologies Inc., a big provider of fleet-fueling, payroll payments, and gift card services, said it has a definitive agreement to acquire Cambridge Global Payments, a Toronto-based processor of cross-border business-to-business payments that handles $20 billion annually in vendor and employee payments for 13,000 companies.

The purchase price is C$900 million ($675 million), which Norcross, Ga.-based Fleetcor will fund with cash on hand and borrowings.

Fleetcor said the acquisition will not only boost its earnings quickly, but also give it entry into the fast-growing B2B cross-border payments, which it pegs as a market with $145 billion in global revenues. Fleetcor chairman and chief executive Ron Clarke said in a conference call with analysts Monday that Cambridge will complement Fleetcor’s Comdata unit, a corporate payment processor that Fleetcor acquired in late 2014.

“We think the growth prospects in Cambridge’s case are great. They’ve doubled revenues over the last four years,” Clarke said during Fleetcor’s first-quarter earnings call, according to a transcript from Thomson Reuters StreetEvents. “And we think, given the large market size, their sales investments, and their technology advantage, that they can double revenue again.”

Fleetcor estimates Cambridge’s revenues have been growing at a 24% compounded annual rate over the past five years and will hit $125 million in 2017. Cambridge’s proprietary technology provides small and mid-sized businesses with wire transfers, electronic funds transfers, drafts and check payments in more than 140 currencies.

Steve McLaughlin, managing partner at Financial Technology Partners LP, a San Francisco-based investment firm that advised Cambridge, said the acquisition will enable Fleetcor to make both domestic and international accounts-payable payments for the same client.

“Cambridge is a leading provider of integrated, B2B international payment and [foreign-exchange] risk-management solutions and one of the largest privately-owned, non-bank specialists worldwide,” McLaughlin said by email. “This sale positions the company to continue to execute on its growth strategy and expand its leadership in the international payments market by leveraging Fleetcor’s resources.”

Fleetcor expects the acquisition to close in the third quarter. Meanwhile, Fleetcor reported first-quarter net income of $123.7 million, an increase of 11% from $111.1 million a year earlier, on revenues of $520.4 million, up 26% from $414.3 million.

In March, Fleetcor and First Data Corp. announced they would form a joint venture to consolidate their respective gift card businesses. The combined revenue of the businesses was $362 million in 2016, according to First Data, which will own 57.5% of the new enterprise. Fleetcor will own 42.5%.