American Express could be in play, Wells Fargo may be potential suitor
08 March 2016
Credit card issuer American Express Co (AmEx) stock rose more than 1 per cent yesterday after Fox Business reported that the company might be in play, with Wells Fargo & Co being a potential suitor.
AmEx may be an acquisition target since investors have lost faith in long-time CEO Kenneth Chenault, who is due to retire soon.
Sources at AmEx told Fox Business Network that Chenault's increasingly tense relations with the company's board – and possible departure - is now fueling speculation among bankers that the company may seek a deal with an outside suitor that would settle the succession issue and give a boost to the company's sagging stock, which has lost 27 per cent over the past year.
Bankers say that one potential suitor could be Wells Fargo, which is looking to expand its credit card business.
Wells declined to comment, while a spokesman for AmEx said that the company ''is not for sale,'' Fox reported
For decades, AmEx, whose current market cap is around $57 billion, was the leader in the credit card business and was widely used by the wealthy, corporate and travelers.
The company's slogan, "Don't leave home without it," coined in 1975 remains one of the catchiest slogans entrenched in the public mind.
The Manhattan-based company is best known for its credit card, charge card, and traveler's cheque businesses. AmEx cards account for around 24 per cent of the total dollar volume of all credit card transactions in the US.
The company's problems started when warehouse-club chain Costco last year announced that it was ending its 16-year partnership with AmEx and made Citigroup to be its exclusive issuer of Costco's credit cards, and Visa Inc to replace AmEx as the credit-card network for Costco's stores starting from 1 April 2016 (See: Costco ends AmEx alliance, partners with Citi, Visa).
The Costco partnership represented 8 per cent, or $80 billion, of AmEx's billed business and about 20 per cent, or about $14 billion, of its interest-bearing credit portfolio.
Shortly after AmEx lost Costco, US low-cost airline JetBlue too scrapped its 10-year deal with AmEx, signing on instead with Barclays and Mastercard. Its partnership deal with Starwood Hotels too may not be renewed after the hotel chain was acquired by Marriott, which partners with Chase.