CHRW Sells Payment Processing Arm - Analyst Blog
17 Oktober 2012 - 7:28PM
Zacks
Leading third party logistic company CH Robinson
Worldwide Inc. (CHRW) has reached a definitive agreement
to sell its payment service business, T-Check Systems Inc., to
Electronic Fund Source LLC (EFS) for a cash consideration of $302.5
million. It is expected that the CHRW will utilize the net proceeds
to fund its planned acquisition of Phoenix international.
T-Check, which has been a subsidiary of CHRW since 1984, is a
business-to-business provider of payment processing services and
supports fund transfer, vendor payment, fuel purchasing and online
expense management among others.
T-Check primarily caters to transportation industry. However,
because of a change in industry dynamics, the Minnesota-based
company has expanded into the financial service sector, thereby
handling fund transfer and expense management for other industries.
After the deal, EFS expects to retain most of T-Checks Minnesota
employees but hasn’t declared any specific number.
Management of CHRW has argued that the strategic rationale for
selling the unit is to bring long term success for T-Check. They
believe that as the financial service sector continues to
consolidate, the integration with EFS will provide T-Check with the
scale and size it requires. On a different note the company hasn’t
performed very well in the preceding three quarters registering a
topline growth of only 3.125% which could be one of the key factors
responsible for the sell.
Recently, CHRW announced that it plans to buy privately-held
global freight forwarding company Phoenix International Inc. in a
cash and equities deal worth $635 million. This was required to
thwart stiff competition from a large number of entities competing
in the international logistics industry like Expeditors
International of Washington Inc. (EXPD). We believe, CHRW
will use the fund to buyout Phoenix International Inc, which will
give it a strong foothold in the freight forwarding industry.
We maintain our long-term Neutral recommendation on C.H.
Robinson Worldwide Inc. The company also retains a Zacks #3 Rank,
implying a short-term Hold rating.
CH ROBINSON WWD (CHRW): Free Stock Analysis Report
EXPEDITORS INTL (EXPD): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Expeditors International... (NASDAQ:EXPD)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Expeditors International... (NASDAQ:EXPD)
Historical Stock Chart
Von Jul 2023 bis Jul 2024