Western Union Said Near $1 Billion Travelex Unit Purchase

July 02, 2011, 1:49 PM EDT By Anne-Sylvaine Chassany, Cristina Alesci and Donal Griffin

(Updates with Susquehanna disclosure and closing share price starting in the fifth paragraph.)

July 1 (Bloomberg) -- Western Union Co., the world’s largest money-transfer firm, is in talks to buy a division of Apax Partners LLP’s Travelex foreign-exchange business for about $1 billion, according to people with knowledge of the matter.

Western Union, based in Englewood, Colorado, may announce an agreement to acquire Travelex’s global business-payments unit as early as next week, said the people, who didn’t wish to be named because the talks are private.

A deal would help Western Union Chief Executive Officer Hikmet Ersek, 50, add revenue from corporate transactions overseas. Consumer-to-consumer services provided 84 percent of the firm’s $1.28 billion revenue in the first quarter, according to the company’s financial report. Travelex describes its business-payments unit as the world’s largest non-bank provider of foreign exchange and risk solutions.

“This business does have good margin characteristics,” said James Friedman, an analyst at Susquehanna Financial Group in New York who has a “positive” rating on Western Union shares. “It certainly has the potential to be more lucrative than the consumer. The fee per transaction is really huge.”

Susquehanna facilitates trading in Western Union shares, which gained 21 cents, or 1.1 percent, to $20.24 at 4:15 p.m. in New York Stock Exchange composite trading.

Ben Harding, a spokesman for London-based private-equity firm Apax, and Tom Fitzgerald at Western Union declined to comment. Dani Filer at Travelex didn’t immediately respond to a message seeking comment.

European Acquisitions

Ersek, who played professional basketball in Austria, is expanding Western Union’s operations in Europe. The company said last month that it would buy the rest of Finint Srl, an Italian money-transfer firm. This year, it also spent $136 million to complete a takeover of Angelo Costa Srl, another Italian company, according to a regulatory filing.

Founded in 1976, Travelex processes international payments for more than 35,000 corporate clients and distribution partners, according to a May statement on its website. It also serves consumers through a network of more than 950 stores and 450 automated teller machines. It handles about 20 billion pounds ($32 billion) of foreign-exchange transactions annually.

Apax, run by CEO Martin Halusa, 56, bought a controlling stake in Travelex in 2005 for more than 1 billion pounds.

--With assistance from Zachary Mider in New York. Editors: David Scheer, Rick Green

To contact the reporters on this story: Anne-Sylvaine Chassany in London at achassany@bloomberg.net; Cristina Alesci in New York at calesci2@bloomberg.net; Donal Griffin in New York at dgriffin10@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; David Scheer at dscheer@bloomberg.net; Edward Evans at eevans3@bloomberg.net

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