American Express Co plans to buy the German marketing company Loyalty Partner for up to $660 million, expanding its international presence. The credit card company and transaction processor said on Thursday it will gain more than 34 million new customers and expand its high-profile rewards program with the deal.
Loyalty Partner sells rewards programs to consumers and merchants in Germany, Poland and India. It also offers consulting and analysis programs for merchants.
European private equity firm Palamon Capital Partners currently owns a 54 percent stake in Loyalty Partner. The deal is its sixth sale of an investment this year and triples its initial equity investment, the firm said.
American Express Vice Chairman Ed Gilligan said in a press release that the deal will help the company's efforts to invest in mobile payments and "digital marketing services."
After the financial crisis, American Express is lending mostly to affluent customers who usually pay their bills in full every month. It is increasingly relying on its transaction processing network for growth, and is expanding into new markets and technologies.
American Express said the deal is expected to close in the first quarter of 2011. It will pay 425 million euros, or $566 million, in cash upfront and will buy an equity interest valued at 71 million euros, or $94 million, from Loyalty Partners' management over the next five years, based on performance.
American Express shares were up less than 1 percent at $46.30 by early afternoon on Thursday.
UBS Investment Bank was the sole financial adviser to American Express on the deal; JPMorgan Chase & Co's (JPM.N) investment bank advised the sellers, including Palamon and Loyalty Partners' other shareholders.