Western Union will
acquire Travelex Global Business Payments (TGBP) – an international
business payments specialist provider, in a cash deal worth £606m
($970m).

The remittance
specialist plans to accelerate growth for the combined business by
driving further geographic expansion, gaining access to new
customers and segments, introducing the TGBP third party
distribution capabilities to Western Union’s financial institution
relationships, and leveraging the Western Union agent network for
distribution in certain markets.

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TGBP conducts business
payments annually for 35,000 customers in 14 countries. Projected
2011 revenues for TGBP are approximately £150m, with a normalised
EBITDA margin of approximately 30%.

“The acquisition of
Custom House in 2009 gave us an entry into the business-to-business
cross-border payments market, and Travelex Global Business Payments
provides us immediate scale, further reach, and added
capabilities,” said Hikmet Ersek, president and CEO of Western
Union.

“The combination of TGBP
and Western Union Business Solutions gives us a strong foundation
in a growing and largely underserved market, and provides us the
opportunity to drive additional growth for years to
come.”

Western Union expects
the combined TGBP / Western Union Business Solutions revenue to
grow at an approximately 10% CAGR over the next three year.
Accelerated longer-term growth and margin expansion opportunities
are anticipated once integration activities have been
completed.

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The TGBP acquisition is
predicted to be dilutive to Western Union’s GAAP EPS by
approximately $0.02 in 2011 and approximately $0.04 in 2012 due to
deal and integration costs and non-cash amortisation expense. The
acquisition is expected to be accretive to 2013 GAAP EPS by
approximately $0.04.

The transaction is
subject to regulatory approvals and satisfaction of closing
conditions, and is expected to close in late 2011.