Western Union deal nets Fexco $159m

IRISH FINANCIAL services group Fexco has netted $159.5 million in cash from a deal that involves it selling its money transfer business to Western Union and acquiring the Colorado-based company’s 25 per cent stake in the Kerry business.

Fexco was involved in about $3 billion worth of money transfers as an agent of Western Union in 2008. It operated the service from locations in Ireland, the UK, Spain, Norway, Finland, Sweden and Denmark.

Commenting on the deal, a spokesman for Fexco said: “The brand owner [Western Union] has a strategic plan to expand its role in Europe directly.”

About 300 Fexco staff will transfer to Western Union as part of the deal, leaving the Irish company with just under 1,200 employees.

Fexco has been an agent of Western Union since 1990 and the US-listed company took a 25 per cent stake in the Irish business in 2001 for a reported €63.5 million.

A spokesman for Fexco said the cash from this deal would be transferred into the Killorglin-based business and there would be no windfall for shareholders.

He said Fexco would use the funds for continued investment in research and development and possibly an acquisition.

“The current climate may offer value and some opportunities, and we would certainly be on the lookout for those,” he explained. “We will also be reorganising our business following this deal. We need to put our thinking caps on.”

Fexco does not break down its revenues, but the money-transfer business is believed to have comprised about a fifth of its €205 million annual turnover.

Western Union will continue to use Fexco’s European call centres in Killorglin and Cahirciveen.

Founded in 1981, Fexco is involved in a number of financial sectors, including stockbroking, VAT refunds and the administration of the Prize Bond scheme. It also operates call centres, recently signing up Bord Gáis as a client.

The spokesman said Fexco enjoyed a strong 2008 with its pretax profit expected to be in excess of €17 million from revenues of €205 million.

This would compare to a pretax surplus of just €1.4 million on similar turnover in 2007, when it booked some exceptional costs.

He said the Irish company had no plans to cut its workforce and Fexco had paid the latest instalment of the national wage agreement. “We have honoured the national wage deal and hopefully we’ll continue to do that into the future,” he added.

The spokesman said the money- transfer business had been impacted by the recession. “When people are uneasy about their jobs they tend to send home less money.”

Fexco shareholders will see their holdings increase proportionately as a result of Western Union selling its 25 per cent share in the business.

The holding of founder and executive chairman Brian McCarthy will grow from 38 per cent to 45 per cent.