PYMNTS-MonitorEdge-May-2024

American Express Reportedly Close To Buying SMB Lender Kabbage For Up To $850M

American Express Co. (Amex) could be the new owner of Kabbage Inc., one of the largest online business lenders.

Sources told Bloomberg News that talks are underway and that the all-cash sale could be announced soon.

If the deal closes, it would value the SoftBank Group Corp.- and Reverence Capital Partners-backed lender at as much as $850 million, the news service reported.

While Amex is the nation’s largest provider of small business credit cards, the purchase of Atlanta-based Kabbage would propel it to be a bigger issuer of loans to small shops. Kabbage offers businesses lines of credit of up to $250,000.

Amex and Kabbage declined to comment.

Shares of Amex rose 1.75 percent in early New York trading on Tuesday (Aug. 11), up from $101.62 at the close on Monday (Aug 10).

Amex has a track record for adding companies. Last year, the New York-based global financial services corporation, acquired Pocket Concierge, a restaurant reservation platform that provides customers with access to more than 800 restaurants in Japan.

Also in 2019, Amex announced that it was acquiring Resy, the New York-based restaurant reservation platform whose software was used by 4,000 restaurants in 10 countries. And two years ago, American Express purchased U.K. FinTech startup Cake Technologies, which allows restaurant-goers to pay a bill more easily.

Bloomberg reported that Kabbage was most recently valued at more than $1 billion after SoftBank invested $250 million into the lender in 2017. Still, the $850 million price tag is far greater than the $90 million in cash and stock that Enova International Inc. agreed to pay for On Deck Capital Inc. in July.

Last month, Amex reported a profitable second quarter but its revenue sharply dropped, as consumer spending collapsed amid a reemergence of the COVID-19 pandemic. The company reported large drops across all of its operations. Its Global Consumer Services Group saw net income fall to $527 million from $881 million for the same period one year ago. Likewise, the company’s Global Commercial Services unit recorded a $60 million quarterly loss versus a $561 million gain a year ago. And Amex’s Global Merchant and Network Services business saw net income fall to $66 million from $564 million in the same period last year.

In other news, Rick Roberts, analyst and portfolio manager on the public equity team at New York-based Vulcan Capital, told PYMNTS that technology has made it possible for “anybody to be a bank now” in the sense of issuing digital credit cards, originating loans or enabling digital payment methods for consumers.

PYMNTS-MonitorEdge-May-2024