Georgia company buying Comdata

Publicly traded firm plans to lift processor's top-line growth to 10%

Payment card issuer and processor Comdata is being bought by a publicly traded Atlanta-area company for $3.45 billion.

FleetCor Technologies, which has a market value of about $11 billion, was rumored last month to have bid for Comdata, which booked $581 million in 2013 revenues. The Georgia-based company, which had 2013 revenues of $895 million, expects its purchase to immediately add to its earnings. Comdata is now owned by private-equity firm Thomas H. Lee Partners and holding company Fidelity National Financial, which bought its parent company Ceridian in 2007.

In a call with analysts and investors Tuesday, FleetCor CEO Ron Clarke said buying Comdata will let his team break into new fuel card segments as well as virtual cards, which Clarke called “the crown jewel” of the Brentwood-based company. Comdata has issued more than 600 million cards to more than 20,000 customers and employs about 1,300 people.

FleetCor (Ticker: FLT) plans to grow Comdata’s top-line growth, which has averaged 6 percent since 2010, to 10 percent by investing in fleet business and corporate payments sales. Adding in “meaningful synergies” from its acquisition, FleetCor’s leadership expects to grow Comdata’s bottom line at twice that pace.

“We expect Comdata’s organic earnings growth […] to exceed 20 percent annually throughout the forecast period,” said Clarke, who reached out to Comdata CEO Stuart Harvey this spring after hearing the local company was planning to file for an initial public offering.

Clarke and his colleagues did not clarify late Tuesday where they expect to cut Comdata costs, but it’s likely that Comdata’s Maryland Farms headquarters and various back-office operations will considerably shrink in size.

Also still up in the air is the future of Comdata’s Stored Value Solutions division, which markets gift cards and prepaid cards and is based in Louisville. SVS has annual revenues of about $90 million.

FleetCor expects to close its purchase by the end of the year.