FleetCor Technologies, Inc. has signed a definitive agreement to acquire Comdata from Ceridian LLC for $3.45 billion. The transaction is expected to close in December 2014.
FleetCor is a global provider of fuel cards and workforce payment products to businesses. Comdata provides fleet, virtual card, and gift card payment systems to over 20,000 customers. It has approximately 1,300 employees and enables over $54 billion in payments annually.
“We have followed Comdata’s growth and development for many years, and are excited today to be bringing the companies together,” said Ron Clarke, chairman and chief executive officer of FleetCor. “Comdata’s virtual payments business will add a completely new growth leg to FleetCor. We believe that the combination will result in significant synergies as we implement our operating disciplines to their portfolio of businesses.”
FleetCor will finance the acquisition with approximately $2.4 billion of new debt and the issuance of approximately 7.3 million shares of FleetCor common stock to Ceridian. The cash payments will be used to pay off Comdata’s outstanding indebtedness.
FleetCor says its acquisition of Comdata will provide a number of benefits:
- Expand FleetCor’s North American fuel card business into new, unserved markets.
- Enable entry into the virtual payments space, an early innings high growth category that could one day be a very substantial business.
- Increase FleetCor’s overall scale, earnings base, and diversity to further strengthen the company over the long haul.
The acquisition of Comdata follows a trend of companies investing heavily in the fuel card business. Two of Comdata’s competitors in the fleet market have been acquired in the last two years: Electronic Funds Source (EFS) by an investment group last April and Fleet One by a fellow fuel card provider, Wright Express, in September, 2012.