Thursday, November 19, 2009
American Express Co. reported on Nov. 18, 2009, that it had agreed to acquire alternative payment solutions provider Revolution Money LLC for approximately $300 million. The transaction is subject to regulatory review and is expected to close in the first quarter of 2010.
Thereafter, Revolution Money will operate as a subsidiary of AmEx and be the first component of its recently formed Enterprise Growth organization. AmEx formed Enterprise Growth to focus on generating incremental fee revenue and drive the company's entry into new payment areas.
Kenneth I. Chenault, AmEx's Chairman and Chief Executive Officer, said the card company wants to preserve the talent and culture that has made Revolution Money successful. He added that initial areas of focus will include:
"What's very clear is that new payment products and platforms are evolving more rapidly than at any time I can remember," Chenault said. "And while there are many growth opportunities in our traditional payments business, we believe that it is important for us to keep identifying cutting-edge technologies."
Chenault noted that while Revolution Money (which was launched by AOL co-founder Steve Case's Revolution LLC in 2007) is a small acquisition, it has significant growth potential as it competes with other online, person-to-person payment providers.
"We believe joining with us will help unlock [Revolution Money's] potential, enable us to deliver competitive online payment products more rapidly and efficiently, give us additional online capabilities, speed our entry into emerging payments, as well as broaden our offerings and access to new customer segments," he said.
Chenault added that Jason Hogg, founder and CEO of Revolution Money, will continue as President and CEO. For Hogg, the acquisition is validation of his company's success.
"When I founded Revolution Money, I envisioned creating an Internet-based platform that could better compete in the emerging online world," Hogg said. "And I can think of nothing more rewarding than having that vision confirmed by joining such an industry icon. In becoming part of AmEx, we'll be able to scale our technology and business and bring more competition and consumer benefits into the marketplace years faster than we ever could on our own."
Ted Leonsis, Chairman of Revolution Money, will become a special advisor to AmEx, working with Chenault on mobile and online payment strategies. Leonsis believes the acquisition was smart for AmEx because the technology and core offerings of Revolution Money can help AmEx launch new products efficiently and at lower costs.
"We built a next-generation platform that will enable AmEx to compete more effectively, especially against online competitors," Leonsis said. "Revolution Money's technology brings the online and offline worlds together in a way that can transform how consumers securely transact. And with the low-cost structure enabled by Internet technology, AmEx is better positioned to scale their online presence over time. This is obviously a big day for both companies."
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