GE Cashes Out

APAmerican Express Buying GE Money UnitThursday March 27, 8:57 am ET
American Express to Acquire GE Money's Corporate Payment Services Division for $1.1 Billion

NEW YORK (AP) -- American Express Co. said Thursday it will acquire the corporate payment services division of GE Money, a unit of General Electric Co., for $1.1 billion in cash.
The corporate payment services division handles commercial card and corporate purchasing transactions, and serves more than 300 corporate clients, including GE. GE agreed to sign a multiyear contract to become a client of American Express' new division.
The corporate payment services unit generated more than $14 billion in purchase volume in 2007.
The acquisition is part of American Express' strategy to grow its payments business. The unit being acquired is similar to American Express' commercial card business, which handles work expenses by employees of mid- and large-sized companies.
American Express said the deal will add to revenue immediately, but reduce earnings slightly in the first few years after the deal is completed. The expectation for a small decline in earnings is based on an expectation the cash used to buy the unit would have otherwise been used to repurchase common stock.
The deal is expected to close by the end of the month.
It was the second deal GE was involved in Thursday. GE Money and Commercial Finance agreed to exchange certain European assets with Banco Santander SA in a deal worth about 1 billion euros ($1.57 billion).
Shares of GE rose 7 cents to $37.20 in premarket trading. American Express shares added 55 cents to $45.91.