The acquisitive fintech services company WEX is scooping up two payments firms for a total of $1.7 billion in a bid to strengthen its global travel business.WEX (ticker: WEX) is buying eNett International, of Melbourne, Australia, which provides business-to-business payments services for the travel industry, and London-based Optal, which streamlines B2B transactions. The $1.7 billion deal includes $1.275 billion in cash and about 2 million Wex shares, valued at $425 million. WEX said it is funding the deal with about $1.4 billion of new debt. The transaction is expected to close by midyear.WEX, of Portland, Maine, provides corporate payments. It operates in three businesses: fleet services, travel and corporate solutions, and health and employee benefits. ENett and Optal are expected to boost WEX’s position in the travel marketplace and strengthen the company’s presence in Europe, the Middle East and Africa, and the Asian-Pacific region, according to a statement.
WEX’s travel division makes payments mainly on behalf of large travel agencies and others in the travel marketplace, CEO Melissa Smith told Barron’s. “We’re really excited that we will be able to grow our product offerings and geographic footprint,” she said. “When you line this up, this is a really good combination.”Smith said WEX plans to combine eNett and Optal. The two companies employ about 400 people, have capabilities in 58 currencies, and produce about $150 million to $160 million of revenue, according to WEX’s investor-relations team.WEX hasn’t decided on a name for the combined eNett-Optal, Smith said. “We are heavily focused on what we can do more effectively together in the marketplace,” she said. “There’s a lot of work we will do between now and when we close.”The transactions are the first in 2020 for the company. It made several acquisitions in 2019, including buying the fuel-card business of EG Group, Discovery Benefits, and Noventis. The deal is expected to produce savings equivalent to $25 million a year for WEX, excluding one-time integration costs, within 24 months after it closes. The transaction is seen adding to WEX’s adjusted net income per share within the first 12 months. WEX shares closed up 3.4% at $230.Travelport, the seller of eNett, is backed by Siris Capital Group and Evergreen Coast Capital Corp. Travelport has owned a majority of eNett since 2009 as part of a joint venture with Optal. Optal, for its part, owns 20% of eNett, a person familiar with the transaction said.Optal has raised about $20 million in venture funding, PitchBook said. Investors include Allectus Capital and UIL. The $1.7 billion is split between the two companies. Optal, with the sale, is valued at around $1 billion but this also includes its stake in eNett, the person said.Siris and Evergreen had been expected to unload eNett since they closed a $4.4 billion deal taking private Travelport, a travel technology company, in May, Skift reported. Siris, a technology-focused private-equity firm, has invested in Web.com and Digital River. Evergreen, the private-equity arm of activist shareholder Elliot Management, also makes tech investments.
Kevin Brunner of BofA Securities and Grant Samuel provided financial advice to WEX, while Clifford Chance, Wilmer Cutler Pickering Hale and Dorr LLP were their legal advisors. Credit Suisse Securities (USA) LLC and LionTree Advisors acted as financial advisors to eNET, while Wachtell, Lipton, Rosen & Katz served as their attorney. Optal received legal advice from Herbert Smith Freehills and financial advice from Financial Technology Partners.Spokespeople for Travelport, Siris, Evergreen, eNett and Optal couldn’t be reached for comment.