Western Union Acquisition Broadens Portfolio and Expands Global Payments Capabilities

Western Union Acquisition Broadens Portfolio and Expands Global Payments Capabilities

Addition of Business-to-Business Payments Provider Opens New Channels and New Customer Segments

ENGLEWOOD, Colo., May 07, 2009 (BUSINESS WIRE) — The Western Union Company (NYSE:WU), a leader in global payments, today announced a definitive agreement to acquire Canada-based Custom House, Ltd., a leading, independent provider of business-to-business international payment solutions for small and medium enterprises (SME). The US $370 million cash transaction is expected to close in the third quarter 2009, subject to regulatory approvals and customary closing conditions.

The international SME payments market is a large, growing and highly fragmented category. Today, Custom House is on plan to generate US $100 million in annualized revenue, primarily from senders in seven countries including Canada, the United States, the United Kingdom, Italy, Australia, Singapore and New Zealand. The company has built a sizable client base, significant international payment capabilities, a strong network of banking partners and scalable operations that are poised to capitalize on this opportunity. Custom House’s multi-channel payment solutions include their online platform, which provides reliable web-based payment capabilities to over 120 countries worldwide. These strengths will be enhanced by Western Union’s globally recognized brand, international footprint and financial strength.

Christina Gold, president and chief executive officer of Western Union, stated, “Custom House is a dynamic business and has a significant customer base in the cross-border payments market, which generates strong margins and cash flow. Western Union intends to grow this business by attracting new customers and entering new geographies.”

Strategic Rationale

The acquisition of Custom House supports Western Union’s strategic plan by:

Entering a new growth market and diversifying its product portfolio
Furthering Western Union’s presence in the SME payment market
Expanding its customer base
Building a global line of business
Establishing strong account-to-account transfer capabilities that complement Western Union’s existing cash-to-cash and account-to-cash expertise

Peter Gustavson, Custom House chairman and founder, stated, “We are extraordinarily proud of what the Custom House team has accomplished as an independent company and are excited about the increased potential that will come from leveraging our collective resources.”

Currently owned by Peter Gustavson and the Boston-based private equity firm Great Hill Partners, Custom House will become part of the Western Union Global Payments segment (formerly the consumer-to-business segment) on completion of the transaction, and continue to operate under its existing management team in Canada. For each of the past nine years, Custom House has been voted one of Canada’s 50 Best Managed Companies.

Ranjana Clark, executive vice president of Global Payments and Global Strategy, stated, “Custom House is a highly complementary business with a proven operating model, seasoned management and differentiating technology. Custom House President and CEO Peter Ciceri and his team are known for providing clients with speed, accuracy and world-class customer service. We look forward to working closely with Custom House as we continue to grow this dynamic business.”

Custom House has been growing revenue at a 20% CAGR over the past three years. The Victoria-based company has a diverse international client base of nearly 40,000 customers with an average principal per transaction of approximately US$25,000. With a strong team of 630 employees worldwide, Custom House’s multi-channel delivery and recurring transaction-based business model has significant operating leverage.

The transaction will be funded by Western Union’s international cash on hand. For 2009, the acquisition is expected to be approximately $0.01 dilutive to Western Union’s earnings per share with the largest portion of the dilution attributable to the new accounting standard that requires expensing of transaction related costs. Additionally, this acquisition is expected to benefit 2009 revenue by less than 1%. The company’s outlook as reaffirmed on April 21, 2009 did not include the impact of this acquisition.

JP Morgan Securities, Inc., acted as financial advisor to Western Union. Financial Technology Partners, LP acted as financial advisor to Custom House.

Safe Harbor Compliance Statement for Forward-Looking Statements

This press release contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “believes,” “estimates,” “guides,” “provides guidance,” “provides outlook” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Readers of this press release by The Western Union Company (the “Company,” “Western Union,” “we,” “our” or “us”) should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout the Annual Report on Form 10-K for the year ended December 31, 2008. The statements are only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement.

Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: changes in general economic conditions and economic conditions in the geographic regions and industries in which we operate; adverse movements and volatility in capital markets and other events which affect our liquidity, the liquidity of our agents, or the value of, or our ability to recover our investments; changes in immigration laws, patterns and other factors related to migrants; technological changes, particularly with respect to e-commerce; the failure by us, our agents or subagents to comply with our business and technology standards and contract requirements or applicable laws and regulations, especially laws designed to prevent money laundering and terrorist financing, and/or changing regulatory or enforcement interpretations of those laws; our ability to attract and retain qualified key employees and to manage our workforce successfully; changes in foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers; political conditions and related actions in the United States and abroad which may adversely affect our businesses and economic conditions as a whole; failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide; significantly slower growth or declines in the money transfer market and other markets in which we operate; failure to implement agent contracts according to schedule; our ability to maintain our agent network and biller relationships under terms consistent with or more advantageous to us than those currently in place; interruptions of United States government relations with countries in which we have or are implementing material agent contracts; deterioration in consumers’ and clients’ confidence in our business, or in money transfer providers generally; failure to manage credit and fraud risks presented by our agents and consumers or non performance of our financial services providers and insurance carriers; adverse rating actions by credit rating agencies; liabilities and unanticipated developments resulting from litigation and regulatory investigations and similar matters, including costs, expenses, settlements and judgments; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, and governmental or judicial interpretations thereof; our ability to favorably resolve tax matters with the Internal Revenue Service and other tax jurisdictions; changes in industry standards affecting our business; changes in accounting standards, rules and interpretations; failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other nonbank money transfer services providers, including telecommunications providers, card associations and card-based payment providers; our ability to grow our core businesses; our ability to develop and introduce new products, services and enhancements, and gain market acceptance of such products; our ability to protect our brands and our other intellectual property rights; our ability to manage the potential both for patent protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection; any material breach of security of or interruptions in any of our systems; mergers, acquisitions and integration of acquired businesses and technologies into our company and the realization of anticipated synergies from these acquisitions; adverse consequences from our spin-off from First Data Corporation, including resolution of certain ongoing matters; decisions to downsize, sell or close units, or to transition operating activities from one location to another or to third parties, particularly transitions from the United States to other countries; decisions to change our business mix; cessation of various services provided to us by third-party vendors; catastrophic events; and management’s ability to identify and manage these and other risks.

About Western Union

The Western Union Company (NYSE:WU) is a leader in global payments. Together with its Orlandi Valuta and Vigo branded money transfer services, Western Union provides consumers with fast, reliable and convenient ways to send and receive money around the world, as well as send payments and purchase money orders. It operates through a network of more than 379,000 Agent locations in over 200 countries and territories. Famous for its pioneering telegraph services, the original Western Union dates back to 1851. For more information, visit www.westernunion.com.

About Custom House

Custom House Ltd is a global payments company that offers extensive international payment solutions. Founded in 1992, Custom House has experienced rapid growth since the investment of Great Hill Partners, the Boston-based private equity firm, in February 2006. Today, Custom House is a worldwide leader in international payments.


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