American Express Reportedly Pursuing Kabbage Acquisition
It looks as though American Express could soon be expanding its small business portfolio by purchasing a top FinTech lender. According to a report from Bloomberg, Amex is in “advanced talks” to buy small business lender Kabbage. Currently it is expected that the price tag on the deal could reach $850 million and would be an all-cash transaction. Bloomberg’s unnamed source suggests that a final proposal could be hammered out as soon as this month but that talks could still fall through. Both parties declined to comment on the matter.
Word of the potential purchase comes on the heels of American Express CEO Steve Squeri noting that the credit card company’s small business customers have proven resilient during the pandemic. Additionally, last month, CFO Jeff Campbell said, “90 days on now, we actually feel really good about the small-business portfolio.”
Of course, Amex also already has a huge interest in small businesses having founded the retail holiday Small Business Saturday, which falls on the Saturday after Thanksgiving each year. More recently, in an effort to help businesses through this difficult time, the company launched its largest #ShopSmall campaign ever. This promotion includes offering eligible cardholders the chance to earn $5 statement credits when they spent more than $10 at a small business (the offer can be used up to 10 times).
As for Kabbage, they’ve been a growing player in the world of online lending and beyond. In fact, the company was among the top SBA Paycheck Protection Program lenders, processing more than $5.8 billion in loans. In terms of funds they’ve raised for themselves, their most recent round was a Series F in 2017, coming solely from Softbank. At the time, the $250 million raise valued the company at $1 billion. Since then, Kabbage has also raised money via debt financing, including $900 million last year.
If a purchase of Kabbage were to come to fruition, it would actually be the second online small business lender to be snapped up in recent weeks. Last month, Enova International announced plans to acquire OnDeck Capital. Notably, however, that purchase pales in comparison to the possible Amex/Kabbage deal, with Enova paying approximately $90 million for OnDeck. That acquisition is currently expected to close sometime this year.
Although an Amex acquisition of Kabbage isn’t a done deal, it does seem like a logical marriage. With Kabbage quickly becoming a leader in small business lending and American Express emphasizing their small business customers, the combined entities could lead to some exciting possibilities for small business owners. Therefore, for FinTech observers and entrepreneurs alike, this could be a deal worth watching.