American Express (Amex) could be the new owner of Kabbage, 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- and Reverence Capital Partners-backed lender at as much as US$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 become a bigger issuer of loans to small shops. Kabbage offers businesses lines of credit of up to US$250,000.
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 UK 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 US$1 billion after SoftBank invested US$250 million into the lender in 2017. Still, the US$850 million price tag is far greater than the US$90 million in cash and stock that Enova International agreed to pay for On Deck Capital 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 US$527 million from US$881 million for the same period one year ago. Likewise, the company’s Global Commercial Services unit recorded a US$60 million quarterly loss versus a US$561 million gain a year ago. And Amex’s Global Merchant and Network Services business saw net income fall to US$66 million from US$564 million in the same period last year.
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