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Dive Brief:
- Fleet payments provider Wex said in a press release Thursday that it will pay about $250 million to buy Payzer, a company providing software tools to small business contractors. Wex will pay up to an additional $11 million if certain performance metrics are satisfied.
- Charlotte, North Carolina-based Payzer offers software for payments, scheduling, invoicing, supply ordering, maintenance and other services to some 150,000 plumbers, roofers and HVAC contractors in the field.
- “The acquisition will advance WEX’s growth strategy of expanding its product suite and creating additional cross-sell opportunities,” by adding a business in a high-growth market with an overlapping clientele, Wex CEO Melissa Smith said in the release.
Dive Insight:
Wex provides payment software services that enable corporate and government customers with large trucking fleets to manage drivers’ fuel and other spending. The global company has about 600,000 customers operating about 19 million vehicles using its platform.
Late last year, Wex signaled it was gearing up for acquisitions, with Smith saying in an interview the economic turmoil then was lowering the price tags for acquisition targets, after prices had climbed in recent years.
In a call with investors, Smith said the total addressable market of the broader U.S. field services market that Payzer serves is about $5 billion. The business, at the intersection of software and payments, is growing at about a 30% clip, Smith said.
The Payzer system allows a contractor customer to manage an appointment with a homeowner customer, and Wex expects to overlay its services on that business, she said.
Payzer generates between $25 million and $30 million in revenue, analysts at the financial firm William Blair said in a note to clients. The purchase is expected to present a slight drag on earnings next year and to buttress them in 2025, according to the analysts. The transaction is expected to be completed by yearend.
Wex snapped up Payzer on the same day it reported third-quarter net income of $18.4 million, compared to a loss of $44.1 million in the year-ago period, as revenue rose 6% to $651.4 million.
The Wex purchase continues a string of payments industry acquisitions this month, putting October in a tie with January now, with 10 purchases, for the most acquisitions this year. Other deals this month included payment processor Shift4 Payments’ purchase of a sports and entertainment business unit from SpotOn for $100 million and payment processor Fiserv’s acquisition of the Brazilian company Skytef.
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