DOW JONES NEWSWIRES

American Express Co. (AXP) agreed to purchase General Electric Co.'s (GE) GE Money's corporate-payment services, which provides commercial payment and purchasing cards to corporations, for $1.1 billion.

The sale, expected to be completed by the end of the month, follows a deal announced earlier Thursday, under which GE would sell its GE Money operations in Germany, Finland and Australia as well as its credit-card and auto businesses in the U.K., in return for assets held by Spanish banking giant Banco Santander SA (STD).

The deals come as GE seeks to redeploy its capital in the financial-services industry amid the turmoil in the stock markets.

GE created corporate-payment services in 1992 to issue corporate travel and entertainment cards and purchasing cards to employees. The unit, which now caters to more than 300 large corporate clients, generated more than $14 billion in 2007 global purchase volume and maintained $1.1 billion in receivables at Dec. 31, the companies said. Its billed business has grown at a compounded rate of 18% over the last five years. It employs about 350 people, largely in Salt Lake City.

The transaction calls for GE, the unit's largest client, to become a client of American Express under a multiyear pact, the companies said.

For American Express, the deal is part of an ongoing strategy to focus on the payments sector and follows the sale last month of its international banking subsidiary. Corporate-payment products are similar to those offered by American Express' commercial card business, which handles the travel, entertainment and purchasing spending by employees of large corporations and mid-sized companies. Accounts typically are paid in full at the end of each month, rather than through a revolving credit account.

The sale also includes the purchase of GE's vPayment technology, which permits the processing of large payments with fraud controls.

Mark Begor, president and chief executive of GE Money's operations in the Americas, said the unit "has been a terrific GE growth story, and today's announcement underscores the value we've created from a business that essentially had a single client only about a decade ago. This transaction meets GE's strategy of redeploying assets in financial services and is a win for GE, our shareowners, and our customers."

American Express expects the acquisition to slightly cut per-share earnings and return on equity in the early years following the transaction.

As part of the deal, American Express will replace the nearly $1 billion in debt that supports the unit's receivables.

In recent premarket trading, GE shares were at $37.22, up less than 1% from Wednesday's close, while American Express climbed 1.2% to $45.91.

-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com

  (END) Dow Jones Newswires
  03-27-08 0857ET
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