FleetCor Buying Comdata; Gift Card Business May Be On the Block

FleetCor Technologies Inc. is buying payment processor Comdata Inc. for $3.45 billion, Norcross, Ga.-based FleetCor announced Tuesday.

The deal gets FleetCor access to four businesses it is not already in, including over-the-road fleet payment services, fuel cards for national accounts, virtual payments and gift cards via Comdata’s Stored Value Solutions unit.

But, the SVS business may not be part of the sale when it closes by the end of December, Ronald F. Clarke, FleetCor president, chairman and chief executive, told analysts during a conference discussing the sale. “We have considered deducting the SVS market,” Clarke says. “We will evaluate the SVS bit as move to closing.”

FleetCor’s acquisitions tend to be within industries it already is familiar with, he said. “We buy things we know and we buy things we can improve. Our confidence in terms of what we can do is not super high today,” Clarke said. “Our goal is to see if we can get more confidence. If we can we’ll hold it. If not, we’ll sell it.” Clarke would not say how much SVS might be valued at should it be sold off. FleetCor also provides fuel cards and payment services.

Other businesses of Brentwood, Tenn.-based Comdata are more exciting for FleetCor, he says. Comdata’s fuel card program adds two complementary markets that FleetCor does not serve, Clarke said. “We like the market potential of expanding to ORT and national accounts,” he says.

FleetCor likes Comdata’s virtual payment service, which creates a one-time-use virtual account number used for a single payment that works everywhere cards are accepted, because it specializes in health care payments, he said.

Comdata processes more than $54 billion in annual payments in 48 nations, processes more than 1.4 billion transactions annually and manages more than 600 million payment cards.

FleetCor is buying Comdata from Thomas H. Lee Partners LP and Fidelity National Financial Inc., which bought Comdata parent company Ceridian LLC in 2007.